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The consequences and ramifications of Events of default under the 2010 GMSLA and the 2018 Pledge GMSLA are different so this section varies quite a bit between the editions.

The reason for divergence

Why the differences in sections (a) through (d)? These reflect the different theoretical underpinnings. Unlike in the 2010 GMSLA the provider of Collateral in a 2018 Pledge GMSLA does not give up either title to it, or control over it: it sits quietly in a darkened corner of the triparty system, in a pledge account, immobilised, held for the security of a passive principal lender, but not going anywhere.

Unlike most pledge arrangements for financial assets in the derivatives trading world, which are a bit of a pantomime and ultimately a sham, a 2018 Pledge GMSLA pledge really is a pledge. The pledged {{{{{1}}}|Collateral}} assets don’t get re-optimised, they can’t be rehypothecated, sold, used, or eaten by the 2018 Pledge GMSLA (at least not unless, and until, the {{{{{1}}}|Borrower}} goes titten hoch). So the {{{{{1}}}|Borrower}} owns them, and has a degree of control over them throughout. If they are not returned, this is likely to be a failure of the custodian, or the triparty system, and not the {{{{{1}}}|Lender}} (who is likely to be a passive participant in an agent lending programme, and not involved in the operational process at all.

The same therefore goes for manufactured income off posted collateral, and a failure to redeliver pledged {{{{{1}}}|Collateral}}.

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