Archives: Master Agreement Terms

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German Federal Court Ruling Important for Future Contractual Netting Arrangements

In a decision of 9 June 2016, the German Federal Court of Justice (Bundesgerichtshof, “BGH”) has ruled that the determination of the close-out amount in a netting provision based on the German Master Agreement for Financial Derivatives Transactions (Rahmenvertrag für Finanztermingeschäfte or DRV) is not legally effective in the event of insolvency to the extent … Continue Reading

Tri-Party Repo Monthly Volume Statistics Report by Todd Zerega and Tom Watterson

By Todd Zerega and Tom Watterson The Federal Reserve Bank of NY released their monthly statistics of the U.S. tri-party repo market. For the month ending January 10, 2013, the total collateral in the U.S. tri-party repo market decreased by $94 billion, a decrease of 4.8%, to $1.88 trillion. The amount of collateral decreased for … Continue Reading

Under the “Bucket Theory,” Zero Purchase Price Repo Transactions Are Considered “Repurchase Agreements” Under Section 101(47) of the Bankruptcy Code by Todd Zerega and Luke Sizemore

By Todd Zerega and Andrew Cross Under the "Bucket Theory," Zero Purchase Price Repo Transactions Are Considered "Repurchase Agreements" Under Section 101(47) of the Bankruptcy Code by Todd Zerega and Luke Sizemore In re Homebanc Mortgage Corp., No. 07-51740-KJC, 2013 WL 211180 (Bankr. D. Del. Jan. 18, 2013) CASE SNAPSHOT The Bankruptcy Court found that … Continue Reading

Distributions from an Investment Advisor to its Customers May Not Be Protected Transactions under Section 546(e) of the Bankruptcy Code by Todd Zerega and Luke Sizemore

  Good day.  Good caselaw?  TSR   By Todd Zerega and Luke Sizemore, Reed Smith LLP CASE SNAPSHOT The liquidating trustee filed avoidance actions against former customers of the debtor—an investment advisor—seeking to avoid a pre-petition distribution to the customers of proceeds from the debtor’s sale of the customers’ securities to a third-party buyer. The … Continue Reading

The Coming Documentation and Collateralization of TBAs and Delayed Delivery MBS Trades? Behold the MSFTA

In mid-November, the Treasury Market Practices Group (“TMPG”) of the New York Fed recommended that forward-settling agency mortgage-backed securities (MBS) be margined in order to prudently manage counterparty risks.  The TMPG has encouraged market participants to COMPLETE the implementation process by EARLY JUNE 2013. The TMPG collateralization recommendation was issued as part of broader set of best … Continue Reading

Mechanics for Accelerating Repo Transactions Due to an Event of Default Under the GMRA by Todd P. Zerega and Luke A. Sizemore, Reed Smith LLP

This column was authored by Todd P. Zerega and Luke A. Sizemore. Under the 2000 version of the Global Master Repurchase Agreement (the "GMRA"), a standard form agreement produced by The Bond Market Association and the International Securities Market Association, an Event of Default occurs, and all outstanding transactions under the GMRA are accelerated immediately, … Continue Reading

Court Opinion for Download: Appointment of Administrators Under U.K.’s Special Administration Regime Is Not an Event of Default Under GMRA (Guest Columnists Todd Zerega and Luke Sizemore)

Download file You can download the Court’s opinion referenced in the 11/6 posting entitled, Appointment of Administrators Under U.K.’s Special Administration Regime Is Not an Event of Default Under GMRA (Guest Columnists Todd Zerega and Luke Sizemore). Good day. Good clicking. TSR… Continue Reading

Appointment of Administrators Under U.K.’s Special Administration Regime Is Not an Event of Default Under GMRA (Guest Columnists Todd Zerega and Luke Sizemore)

By Todd Zerega and Luke Sizemore, Reed Smith LLP Under the Global Master Repurchase Agreement (the “GMRA”), a standard form agreement produced by The Bond Market Association and the International Securities Market Association, all of the events of default (with one exception) require both (i) the occurrence of an event and (ii) service by the … Continue Reading

JP Morgan, The Volcker Rule and The Close-Out Amount/Loss vs. Market Quotation Debate

One of the perennial discussion points in ISDA negotiations between swap dealers and their buyside customers is whether to use Market Quotation (1992 ISDA Master Agreement), Loss (1992 ISDA Master Agreement) or Close-Out Amount (2002 ISDA Master Agreement) for purposes of calculating how much is owed by which party, if the transactions under an ISDA are subject to early termination (i.e., as … Continue Reading

“Mitigating Collateral Damage: Current Themes in Managing and Mitigating Counterparty Credit Risk for OTC Derivatives”: A BNY Mellon InteDelta 2011 White Paper

On January 24th, BNY Mellon and InteDelta issued a white paper entitled, “Mitigating Collateral Damage: Current Themes in Managing and Mitigating Counterparty Credit Risk for OTC Derivatives”  The publication can be accessed by clicking here. In the white paper, BNY Mellon and InteDelta discuss the results of their survey of a number of U.S. and European asset … Continue Reading

Credit Event Upon Merger under the ISDA Master Agreement

Question 1: Who determines whether Credit Event Upon Merger Termination Event has occurred under Section 5(b)(iv) of the published form of 1992 ISDA Master Agreement (Section 5(b)(v) of the 2002 ISDA Master Agreement)? Answer 1:The Affected Party – see Section 6(b)(i) of both the 1992 and 2002 versions of the ISDA Master Agreement? Question 2:So, what does that really … Continue Reading

Review: “A Swap Provider’s Guide To Syndicated Loan Documents That Incorporate Bilateral Swap Facilities”

A Swap Provider’s Guide To Syndicated Loan Documents That Incorporate Bilateral Swap Facilities AUTHORS William L. Harvey: Vice president and senior counsel at Union Bank, N.A. Svetlana G. Attestatova: Senior associate at Reed Smith (San Francisco office) WHO WOULD BE INTERESTED IN THIS ARTICLE 1) Counsel to lenders in a syndicate lending arrangement 2) Counsel … Continue Reading

SPOT FX: Say What You Mean, Mean What You Say

Sometimes you run into an issue that is so blatantly obvious -and with such great frequency – that you say to yourself, “I have got to be seeing ghosts – this can’t really be an issue, can it?” The definition of what constitutes “Spot FX” is one of these issues that is on our minds today … Continue Reading

Interest On Early Termination of Derivatives

In the wake of the September 2008 bankruptcy of Lehman Brothers, many derivatives market participants started to pay attention to terms in their trading agreements that were viewed – prior to the Lehman bankruptcy – as "boilerplate provisions." In other words, the type of provisions that nobody would ever even think about negotiating (or even … Continue Reading
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