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Marking to Market of Collateral during the currency of a Loan on aggregated basis - GMSLA Provision: Difference between revisions
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Marking to Market of Collateral during the currency of a Loan on aggregated basis - GMSLA Provision (view source)
Revision as of 14:51, 18 April 2016
, 18 April 2016→Commentary
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This provision covers the determination of the amount of {{gmslaprov|Collateral}} required - the {{gmslaprov|Required Collateral Value}} - where {{gmslaprov|Loan}} exposures are determined on an aggregated basis. | This provision covers the determination of the amount of {{gmslaprov|Collateral}} required - the {{gmslaprov|Required Collateral Value}} - where {{gmslaprov|Loan}} exposures are determined on an aggregated basis. | ||
Interestingly, a failure to deliver {{gmslaprov|Equivalent}} {{gmslaprov|Collateral}} during the life of the transaction under this provision (as opposed to on termination of a Loan) is not captured by the {{gmslaprov|mini close-out}} mechanism under {{gmslaprov|9.1}} and {{gmslaprov|9.2}}. One might mount an argument to say that it should be. | |||
The {{gmsla}} allows you to specify that {{gmslaprov|Collateral}} managed on an aggregate basis, under this Clause, or on a loan-by-loan basis under Clause {{gmslaprov|5.5}}. Generally speaking it is easier (and in a [[close out]] situation against a non-[[netting]] countertparty, more [[capital]] effective) to collateralise on an aggregate basis under this Clause so this will be the strong preference for most counterparties except in fairly unusual or bespoke situations. | |||
{{nuts|GMSLA|5.4}}: | {{nuts|GMSLA|5.4}}: | ||