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Pension clearing exemption- the UK takes the road less travelled

To the surprise of very few, HM Treasury (HMT) yesterday stated its intention to introduce a statutory instrument extending the exemption for pension funds from the clearing obligation by a period of two years and extending the temporary intragroup exemption regime by a further three years. The statutory instrument will amend Article 89 (1) of UK […]

Transaction Exposure

At a high level, under the GMRA, if one party has “Transaction Exposure” to its counterparty, the counterparty must make a “Margin Transfer” to the party with “Transaction Exposure” in order to extinguish that “Transaction Exposure”. Conceptually, “Transaction Exposure” is best understood by asking the question “In relation to a particular Repurchase Transaction, if we […]

GMRA A-Z: Default Market Value

Whilst the definition of “Market Value” is used for the purposes of calculating the value of securities under the margin maintenance provisions, a different concept is used to value collateral on a close-out.  This is the concept of “Default Market Value”. If we take a step back, it makes sense to use ‘just the normal’ […]

Automatic Early Termination

Normally, under Paragraph 10(b) of the 2011 GMRA, if an Event of Default has occurred and is continuing, then the non-Defaulting Party may (by sending a notice to its counterparty) designate a day as an Early Termination Date in respect of all outstanding Transactions.  This has the effect of bringing forward the Repurchase Date with […]

Mandatory Buy In- reports of whose death at least exaggerated

Just as the market had come to the happy conclusion that last November’s shelving of the CSDR mandatory buy in (“MBI”) requirements was essentially a face-saving exercise, to be followed by quiet abandonment, the Commission has raised somewhat vague prospects of their revival.  On 16 March 2022, the EC published a legislative proposal for a Regulation […]

CSDR- mandatory buy in shelved

To the surprise of few, but the relief of many, the EU Parliament and Council have signalled a postponement of mandatory buy in (MBI) rules under the CSDR. Tabled under Any Other Business at a trilogue meeting agreeing the setup of a Distributed Ledger Technology regulatory sandbox, the co-legislators issued a “non-paper” referencing the upcoming […]

BRRD II: Another day, another Protocol

Yesterday, ISDA launched a new module to the ISDA Resolution Stay Jurisdictional Modular Protocol (JMP)- the BRRD II Omnibus Module (“the Module”). Not to be confused with either Omnibus Directives, the new module acts to amend contracts to incorporate BRRD II Article 71a revisions. These revisions require third-country counterparty consent to statutory stays on early […]

UK-EU unequalled

UK Chancellor Rishi Sunak’s Mansion House speech yesterday delivered the final coup de grace headshot to any lingering hopes for EU-UK equivalence. “The UK has an abiding interest in a prosperous and productive Europe. We have deep shared values and a long history of cooperation. And we will strengthen those ties. At the same time, […]

BRRD- the other shoe drops

The BRRD includes broad contractual stay powers enabling EEA Regulators to temporarily:  suspend payment/delivery obligations, restrict the enforcement of security interests and suspend termination rights. Affected financial contracts comprise the majority of English law derivatives, repo and securities lending contracts as well as relevant master agreements. On 22 April 2021 the Commission adopted a delegated […]

LIBOR cessation date set

The FCA has today issued the official death knell for LIBOR. The announcement constitutes an index cessation event under the IBOR Fallbacks Supplement and the ISDA 2020 IBOR Fallbacks Protocol for all 35 LIBOR settings. 5 March 2021 is therefore the date on which the fallback spread adjustment will be fixed. Publication of 26 LIBOR […]

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