Requirements to deliver excess Collateral - GMSLA Provision

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2010 Global Master Securities Lending Agreement
A Jolly Contrarian owner’s manual™

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Clause 5.6 in a Nutshell

Use at your own risk, campers!
5.6: Where Collateral values are aggregated under paragraph 5.4 and, on any day, both Parties would otherwise have to deliver Collateral to each other, the respective Market Values will be set-off and, in full settlement of both parties’ obligations, the Party having the larger delivery obligation must deliver Collateral having a Market Value equal to the difference.

Full text of Clause 5.6

5.6 Requirements to deliver excess Collateral
Where paragraph 5.4 applies, unless paragraph 1.4 of the Schedule indicates that this paragraph 5.6 does not apply, if a Party (the first Party) would, but for this paragraph 5.6, be required under paragraph 5.4 to provide further Collateral or deliver Equivalent Collateral in circumstances where the other Party (the second Party) would, but for this paragraph 5.6, also be required to or provide Collateral or deliver Equivalent Collateral under paragraph 5.4, then the Market Value of the Collateral or Equivalent Collateral deliverable by the first Party (X) shall be set off against the Market Value of the Collateral or Equivalent Collateral deliverable by the second Party (Y) and the only obligation of the Parties under paragraph 5.4 shall be, where X exceeds Y, an obligation of the first Party, or where Y exceeds X, an obligation of the second Party to repay and/or (as the case may be) deliver Equivalent Collateral or to deliver further Collateral having a Market Value equal to the difference between X and Y.

Related agreements and comparisons

Related agreements: Click here for the same clause in the 2018 Pledge GMSLA
Related agreements: Click here for the same clause in the 1995 OSLA
Comparison: Template:Gmsladiff 5.6
Comparison: Template:Osladiff 5.6

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Content and comparisons

Template:M comp disc GMSLA 5.6

Template

Summary

Paragraph 5.6 is the clincher in the “aggregate portfolio collateralisation” netting analysis started in paragraph 5.4. It means you don’t have to gross up collateral flows across portfolios of longs and shorts.

Read together with Sections 5.6 and 5.7 (and also see GMSLA Netting).

Template

See also

Template:M sa GMSLA 5.6

Template

References