GMRA Anatomy

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Financial Weapons of Mass Destruction®


Let’s go get sushi and not pay!

Docs Global Master Repurchase Agreement and Master Repurchase Agreement. Vague where it needs to be and not heavily negotiated. 3
Amendability Bilateral, so yes, in theory — but would you, unless MiFID changed and you had to? No. 2
Collateral Yes. Generally cash. 0
Transferability 0
Leverage Fully cash collateralised, so nope. 0
Fright-o-meter Sorry: not going to get hearts racing. You can’t even short with them. 1

What is a repo?

In a Nutshell: A repo, or repurchase agreement, and its close relation the sell/buy-back[1], is a way of borrowing government bonds.

Documentation: Repos are most commonly documented under a 2000 Global Master Repurchase Agreement, the industry standard English law agreement, published by TBMA and ICMA

Structure: Repos are structured as a spot DVP sale at market, and a later DVP repurchase, also at market, of the same securities (hence, “repurchase”). In any case there is always a cash leg — by which the “Buyer” pays for the govvies — and a securities leg — by which the Seller delivers them. Contrast that with a stock loan where both the Loan and the Collateral leg are physical settlements of securities.

Term: Repo trades are usually very short term, typically overnight.

Reverse repo: a reverse repo is just a repo from the point of view of the buyer. The Buyer buys and agrees to sell back later; the Seller sells and agrees to buy back later.

Does a repo count as borrowed money?

According to Simon Firth on derivatives, no. Nor does a stock loan.


1. Applicability
2. Definitions
3. Initiation; Confirmation; Termination
4. Margin Maintenance
5. Income Payments
6. Payment and Transfer
7. Contractual Currency
8. Substitution
9. Representations
10. Events of Default
11. Tax Event
12. Interest
13. Single Agreement
14. Notices and Other Communications
15. Entire Agreement; Severability
16. Non assignability; Termination
17. Governing Law
18. No Waivers, etc.
19. Waiver of immunity
20. Recording
21. Third Party Rights
EA 1. Scope (Equity Annex)
EA 2. Interpretation (Equity Annex)
EA 3. Income Payments (Equity Annex)
EA 4. Corporate actions and voting
EA 5. Transfer (Equity Annex)

See also