Template:Nutshell GMRA 4

4. Margin Maintenance
4(a) Margin Transfers: Whenever a party has a Net Exposure to the other party it may by notice require the other party to make a Margin Transfer in an aggregate amount equal to that Net Exposure.
4(b) Net Exposure notices: A Net Exposure notice may be given orally or in writing.
4(c) Net Exposure calculation: A party’s Net Exposure to the other party is the excess of:

(A) the total of its Transaction Exposures plus any Income Payments the other party owes minus the Net Margin provided to it by the other party, over

(B) the total of the other party's Transaction Exposures plus any Income Payments it owes the other party minus any Net Margin it provided to the other party;

converting amounts into the Base Currency at the prevailing Spot Rate where necessary.
4(d) Margin composition: The party transferring Margin may decide what to deliver except that, where it holds Net Margin, the party requesting a Margin Transfer may require it to return equivalent Net Margin first.
4(e) Base Currency: Cash Margin must be in the Base Currency unless otherwise agreed.
4(f) Indebtedness: A payment of Cash Margin creates indebtedness from the recipient to the payer. It will bear interest as specified in Annex I.
4(g) Margin Transfers: Where either party has to make a Margin Transfer, it must transfer Cash Margin or Margin Securities within the period specified in Annex I or, if not specified, within the customary settlement period for the Margin in question.
4(h) Alternatives to Margin Transfer: The parties may agree to disregard sub-paragraphs 4(a) to 4(g) and instead provide margin separately for any Transaction. If so:

(i) that Transaction won’t count when calculatingNet Exposures;

(ii) the parties will agree separate margin terms for that Transaction; and

(iii) sub-paragraphs 4(a) to 4(g) won’t apply to that Transaction.

4(i) Alternatives to Margin Transfers: Instead of requiring Margin Transfers, the parties may agree to manage their Net Exposures by repricing Transactions under paragraph 4(j), adjusting them under paragraph 4(k), or a bit of both.
4(j) Repricing: Where the parties agree to reprice a Transaction (the “Original Transaction”):

(i) the Repurchase Date under the Original Transaction will be adjusted to the repricing date (the “Repricing Date”);

(ii) the parties will strike a new Transaction (the “Repriced Transaction”) as set out below;

(iii) the Purchased Securities will be equivalent to those under the Original Transaction;

(iv) the Purchase Date will be the Repricing Date;

(v) the Purchase Price will be the amount which, when multiplied by the Margin Ratio for the Original Transaction, would equal the Market Value of such Securities on the Repricing Date;

(vi) all other terms of the Repriced Transaction will be identical to the Original Transaction;

(vii) the parties’ respective delivery and obligations on commencement of the Repriced Transaction will be set off against their respective obligations on termination of the Original Transaction and a net cash sum shall be paid by one party to the other within the period set out in paragraph 4(g).

4(k) Adjusting Transactions: The parties may agree to adjust a Transaction (the “Original Transaction”) as of any date (the “Adjustment Date”) by terminating the “Original Transaction” and entering into a “Replacement Transaction” as follows:

(i) the Original Transaction will terminate on the Adjustment Date as agreed between the parties in advance;

(ii) the parties will also agree in advance the Purchased Securities, being Securities having an aggregate Market Value as at the Adjustment Date substantially equal to the Repurchase Price under the Original Transaction multiplied by its Margin Ratio;

(iii) the Purchase Date for the Replacement Transaction will be the Adjustment Date;

(iv) the parties will also agree in advance the other terms of the Replacement Transaction; and

(v) the parties will settle their respective payment and delivery obligations under the Original Transaction and the Replacement Transaction on the Adjustment Date under paragraph 6 within the period set out in paragraph 4(g).