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2000 Global Master Repurchase Agreement
A Jolly Contrarian owner’s manual™
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Paragraph 6 in a Nutshell™
Use at your own risk, campers!
Full text of Paragraph 6
6. Payment and Transfer
6(a) Unless otherwise agreed, all money paid hereunder shall be in immediately available freely convertible funds of the relevant currency. All Securities to be transferred hereunder
- (i) shall be in suitable form for transfer and shall be accompanied by duly executed instruments of transfer or assignment in blank (where required for transfer) and such other documentation as the transferee may reasonably request, or
- (ii) shall be transferred through the book entry system of Euroclear or Clearstream, or
- (iii) shall be transferred through any other agreed Securities clearance system or (iv) shall be transferred by any other method mutually acceptable to Seller and Buyer.
6(b) Unless otherwise agreed, all money payable by one party to the other in respect of any Transaction shall be paid free and clear of, and without withholding or deduction for, any taxes or duties of whatsoever nature imposed, levied, collected, withheld or assessed by any authority having power to tax, unless the withholding or deduction of such taxes or duties is required by law. In that event, unless otherwise agreed, the paying party shall pay such additional amounts as will result in the net amounts receivable by the other party (after taking account of such withholding or deduction) being equal to such amounts as would have been received by it had no such taxes or duties been required to be withheld or deducted.
6(c) Unless otherwise agreed in writing between the parties, under each Transaction transfer of Purchased Securities by Seller and payment of Purchase Price by Buyer against the transfer of such Purchased Securities shall be made simultaneously and transfer of Equivalent Securities by Buyer and payment of Repurchase Price payable by Seller against the transfer of such Equivalent Securities shall be made simultaneously.
6(d) Subject to and without prejudice to the provisions of sub paragraph 6(c), either party may from time to time in accordance with market practice and in recognition of the practical difficulties in arranging simultaneous delivery of Securities and money waive in relation to any Transaction its rights under this Agreement to receive simultaneous transfer and/or payment provided that transfer and/or payment shall, notwithstanding such waiver, be made on the same day and provided also that no such waiver in respect of one Transaction shall affect or bind it in respect of any other Transaction.
6(e) The parties shall execute and deliver all necessary documents and take all necessary steps to procure that all right, title and interest in any Purchased Securities, any Equivalent Securities, any Margin Securities and any Equivalent Margin Securities shall pass to the party to which transfer is being made upon transfer of the same in accordance with this Agreement, free from all liens, claims, charges and encumbrances.
6(f) Notwithstanding the use of expressions such as “Repurchase Date”, “Repurchase Price”, “margin”, “Net Margin”, “Margin Ratio” and “substitution”, which are used to reflect terminology used in the market for Transactions of the kind provided for in this Agreement, all right, title and interest in and to Securities and money transferred or paid under this Agreement shall pass to the transferee upon transfer or payment, the obligation of the party receiving Purchased Securities or Margin Securities being an obligation to transfer Equivalent Securities or Equivalent Margin Securities.
6(g) Time shall be of the essence in this Agreement.
6(h) Subject to paragraph 10, all amounts in the same currency payable by each party to the other under any Transaction or otherwise under this Agreement on the same date shall be combined in a single calculation of a net sum payable by one party to the other and the obligation to pay that sum shall be the only obligation of either party in respect of those amounts.
6(i) Subject to paragraph 10, all Securities of the same issue, denomination, currency and series, transferable by each party to the other under any Transaction or hereunder on the same date shall be combined in a single calculation of a net quantity of Securities transferable by one party to the other and the obligation to transfer the net quantity of Securities shall be the only obligation of either party in respect of the Securities so transferable and receivable.
6(j) If the parties have specified in Annex I hereto that this paragraph 6(j) shall apply, each obligation of a party under this Agreement (other than an obligation arising under paragraph 10) is subject to the condition precedent that none of those events specified in paragraph 10(a) which are identified in Annex I hereto for the purposes of this paragraph 6(j) (being events which, upon the serving of a Default Notice, would be an Event of Default with respect to the other party) shall have occurred and be continuing with respect to the other party.
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Related agreements and comparisons
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Related agreements: Click here for the same clause in the 1996 MRA, when we get round to finding out the first thing about it.
Comparison: Knowing and, really, caring very little about other kinds of repo agreement, we have nothing presently to compare the Global Master Repurchase Agreement with.
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Content and comparisons
Template:M comp disc GMRA 6
Summary
Paragraph 6(a)
Nothing really to see here: payments must be unencumbered, and in these days of real-time electronic settlement, Clearing Systems and the like, it is quite hard not to transfer things unencumbered: it is a basic condition of eligibility to clearing systems for securities, and currencies, by definition, are unencumbered (there is an essay on this subject on our cash page), and while they may not freely transferable, that will be a function of central bank regulations for the currency in question, or international sanctions and so on, and not really within the gift of the transferor to do much about.
Paragraph 6(b)
Your standard tax gross-up clause. No fiddly “Indemnifiable Tax” exceptions, as there are in the ISDA Master Agreement. The theory of the game here: any withholding obligation imposed on a payer or deliverer is that party’s problem — they chose to situate their office in Weston-super-Mare, so they should take hte tax consequences of that.
Paragraph 6(c)
Everything is DVP. This ought not come as a surprise in our digital age, but there may be certain asset classes where this is not possible — especially if you are using your Global Master Repurchase Agreement to muck around with commodities and things like that — and some currency situations (like Roubles) where for various reasons counterparties might like to be prefunded.
Paragraph 6(d)
Some proper “thanks for writing in, fellas” moments here for ICMA’s crack drafting squad™. Like paragraph 6(d), which bestows on the contractual counterparties the unilateral right to waive their own contractual rights — gee whizz, I never — and which is peppered cryptically throughout the rest of the document “, subject to paragraph 6(d)” — leading unsuspecting readers to believe this mysterious paragraph 6(d) must actually do something more consequential rather than stating the bleeding obvious.
To give ICMA’s crack drafting squad™ a little credit, they were signposting that things can get hairy and choppy in the securities markets (and currency markets) and the idea of the Global Master Repurchase Agreement is that people act as good eggs and don’t stand on ceremony. So if you can’t SDVP for infrastructural or geopolitical reasons — any reasons bar your own credit implosion — you ought not to be a dick about it. This clause doesn’t stop you being a dick about it — but it is a counsel of prudence all the same.
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General discussion
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See also
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References