If you are using a GMRA 2000, it is important to ensure that all standard evaluation notices are sent before the five trading days beginning on the date of the outage expire. This period expires on the fifth day of trading on the corresponding market of the securities concerned. Because the appropriate market depends on the nature of the securities in question, the time frame may be shorter than you would expect, as the appropriate market may be elsewhere or in a different time zone. The briefing consists of three sections: the first focuses on cases of denis under the Global Master Buyback Contract (GMRA) that may be triggered by the pandemic and/or related developments; The second describes the closing process under the GMRA; the third deals with the critical issue of notices and how to ensure delivery on the right day and at the right time. Throughout the briefing, we consider the 2000 and 2011 versions of GMRA in their standard forms as the most common forms of GMRA on the market. Capitalized terms, when not defined, have the meaning given to them in the GMRA. In previous briefings (accessible via our COVID-19 Hub), we have studied the effects that the coronavirus pandemic (COVID-19) could have on the OTC derivatives market. In this briefing, we examine the impact that the epidemic could have on the buyback or reaner market. This is done in one of three ways, depending on whether the non-failing party was able to buy or sell the securities in question (if any) or to obtain offers for the securities in question.
In the case of GMRA 2000, these purchase or sale transactions must be made or solicited during the period between the start of the default and the conclusion of a transaction in the corresponding market on the fifth day of trading the following day. In the case of GMRA 2011, these purchase or sale transactions or offers received must take place on the date or place of the termination date. This definition, combined with the maximum 20-day notice period, means that the 2011 GMRA period is somewhat more flexible than the five-day negotiation period for assessing the 2000 GMRA failure. In practice, it is not possible to apply a general rule to the importance of the « transaction », so it should always be common to include a certain amount of time in your contract when a certain amount of time is required.