Other costs, expenses and interest payable in consequence of an Event of Default - GMSLA Provision

GMSLA Anatomy™ Go Premium In a Nutshell™ Clause 11.7: 11.7 Costs and expenses following an Event of Default: The Defaulting Party must pay the Non-Defaulting Party’s reasonable professional expenses in connection with the Event of Default plus interest at the rate agreed by the Parties or failing that, the overnight LIBOR rate as at 11.00 a.m., London time. Interest will accrue and compound daily. view template 2010 GMSLA full text of Clause 11.7: 11.7 Other costs, expenses and interest payable in consequence of an Event of Default: The Defaulting Party shall be liable to the Non-Defaulting Party for the amount of all reasonable legal and other professional expenses incurred by the Non Defaulting Party in connection with or as a consequence of an Event of Default, together with interest thereon at such rate as is agreed by the Parties and specified in paragraph 10 of the Schedule or, failing such agreement, the overnight London Inter Bank Offered Rate as quoted on a reputable financial information service (LIBOR) as at 11.00 a.m., London time, on the date on which it is to be determined or, in the case of an expense attributable to a particular transaction and, where the Parties have previously agreed a rate of interest for the transaction, that rate of interest if it is greater than LIBOR. Interest will accrue daily on a compound basis. view template 2010 GMSLA: Full wikitext · Nutshell wikitext | GMLSA legal code | GMSLA Netting Pledge GMSLA: Hard copy (ISLA) · Full wikitext · Nutshell wikitext | 1995 OSLA: OSLA wikitext | OSLA in a nutshell | GMSLA/PGMSLA/OSLA clause comparison table From Our Friends On The Internet: Guide to equity finance | ISLA’s guide to securities lending for regulators and policy makers Navigation 2010 GMSLA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · 22 · 23 · 24 · 25 · 26 · 27 · Schedule · Agency Annex · Addendum for Pooled Principal Agency Loans 2018 Pledge GMSLA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · 22 · 23 · 24 · 25 · 26 · 27 · 28 · Schedule · Agency Annex Stock lending agreement comparison: Includes navigation for the 2000 GMSLA and the 1995 OSLA Index: Click ᐅ to expand: GMSLA Pledge GMSLA OSLA Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

This is the Default Interest provision of the 2010 GMSLA. Note a potentially troublesome reference to LIBOR in there, seeing as LIBOR is being phased out, though it is only a fall back, and only for Default Interest on its legal fees (once a party has failed to meet its payment obligations) so, while there are more cataclysmic threats to the capital markets than this, that won’t stop financial services firms across the western world diverting key internal risk management resource towards remediating it, generating 18 months’ meaningful employment for an army of contractors of course.

Note:

• This only captures interest on professional expenses incurred in closing out a 2010 GMSLA. It corresponds to Clause 10(f) of the Global Master Repurchase Agreement, which is written in similar terms.
• This would not capture a “mini close-out” under 9.1(b) or 9.2(b) as a result of a settlement fail under normal market procedures. These are treated as if they were Events of Default, but they are deemed not to be Events of Default. For those you pay the innocent party’s actual interest costs, not its theoretical ones, so there is no need to refer to a benchmark.

See also

• Clause 10(f), being the equivalent (and similar) part of the Global Master Repurchase Agreement.
• Mini close-out