Understanding the GMRA - Livestreamed
New dates TBC - e-mail education@icmagroup.org to register your interest


OVERVIEW
COURSE CONTENT
COURSE DETAILS

This workshop is organised by the International Capital Market Association (ICMA). It analyses how repo transactions operate within the framework provided by the Global Master Repurchase Agreement (GMRA), and highlights the issues that need to be addressed by users. The GMRA is the essential underpinnings of the cross-border repo market.
In order to provide a clear practical context to documentation and underlying issues, the workshop starts with a rigorous introduction to the fundamental legal and operational characteristics of repo, transactional uses and markets. The main body of the workshop is a detailed review and comparison of both legal agreements and how they structure risk and operational management. The workshop also examines the role of and special issues posed by key market infrastructures such as electronic trading venues, triparty collateral management and central clearing through CCPs, and new regulation.
The workshop is introduced and co-ordinated by Richard Comotto, who is the author of ICMA’s European repo survey, its Guide to Best Practice in the European Repo Market and its Repo FAQs. Other speakers are legal and documentation professionals, and operational specialists from ICMA,  Ashurst LLP,  LCH Limited and Euroclear.
This course analyses how repo transactions operate within the framework provided by the Global Master Repurchase Agreement (GMRA) and highlights the issues that need to be addressed by users. The GMRA has underpinned the development of the cross border repo markets since its first publication in 1992 with subsequent revised versions in 1995, 2000 and 2011.

The workshop provides a clear practical context to documentation and underlying issues, starting with a rigorous introduction to the fundamental legal and operational characteristics of repo, transactional uses and markets. The main body of the workshop involves a detailed review of this master agreement and how it structures risk and operational management. The workshop also examines the role of and special issues posed by key market infrastructures such as electronic trading venues, triparty collateral management and central clearing through CCPs, and new regulation.

The workshop is introduced and co-ordinated by Richard Comotto, who is the author of ICMA’s European repo survey, its Guide to Best Practice in the European Repo Market and its Repo FAQs. Other speakers are legal and documentation professionals, and operational specialists from ICMA, Ashurst LLP,  LCH Limited and Euroclear.

Course Outcomes

By completing this course you will be able to:
  • Explain why master agreements are necessary in general and the advantages of using GMRA in particular. 
  • Understand how the GMRA is organized and be able to navigate their way around the document to find provisions relevant to particular issues.
  • Become aware of the ICMA’s Guide to Best Practice in the European Repo Market and its role in relation to the GMRA and market procedures.
  • Understand the dual nature of repo as a sale-and-repurchase legal structure performing the economic functions of a secured loan and apply this insight by answering questions about repo from first principles.
  • Compare and contrast repurchase transactions and buy/sell-backs.
  • Appreciate the flexibility of the GMRA to allow the varied structuring of repos.
  • Explain the role of haircuts and initial margins, compare and contrast them, and apply them to exposure calculations.
  • Demonstrate, by reference to the GMRA, the calculation of transaction and net exposures, including net margin, and the concepts of Repricing and Adjustment.
  • Outline, by reference to the GMRA, the post-trade operational procedures and contingency provisions in the GMRA for substitution of collateral, corporate events and failed settlement.
  • Explain, by reference, the default procedures under the GMRA.
  • Recognize the key legal issues affecting repos, including legal cases, issues that might arise from the use of the GMRA in foreign jurisdictions and the potential impact of Brexit; and they should know how to use legal opinions.
  • Understand the role of tri-party collateral management, what tri-party agents do and do not do, and how use of a tri-party agent affects use of the GMRA.
  • Understand what is meant by central clearing, the role of a CCP and how use of a CCP affects use of the GMRA.
  • Identify and outline the key capital, leverage, liquidity regulations applying to repos in Europe as well as settlement and reporting requirements.
  • Explain the potential impact of sustainability requirements on the use of collateral in repo.


Who should attend?
      
The workshop uses the GMRA as a framework to provide a structured approach to understanding the instrument, its usage and the market. No legal expertise is required. The workshop can therefore be useful, not just for legal and documentation staff, but also for front office, risk management, operational, compliance, audit and regulatory personnel.

The course syllabus is divided into the following areas:

Day 1
Introduction – the Mainstreaming of Sustainable Finance
Breakout session
Dynamics in the GSS bond markets
GSS Bond Product Snapshot
Focus on the 4 Pillars of the Green Bond Principles
Analysis of the GBP’s Core Pillars; Pillar 1: Use-of-Proceeds
Pillar 2: Process for Project Evaluation and Selection & Pillar 3: Management of Proceeds
Pillar 4: Reporting
Session One
  • The role and architecture of the GMRA
    • Role of master agreements
    • Scope of GMRA in terms of counterparties, transaction structures and collateral
    • Architecture of the GMRA: main text, annexes, confirmations, Protocol
    • ICMA’s Guide to Best Practice in the European Repo Market
  • The legal structure of a repo
    • Basic mechanics, key features and illustrative worked example
    • Key terminology - from the market and in the GMRA
    • Definition of a repo - generic and in the GMRA
    • Why title transfer is essential to repo
  • The economic operation of a repo
    • Repo as a secured loan, repo interest
    • Distribution of risk/return on collateral 
    • How the economics of a repo are enshrined in the GMRA
    • Footnote: the consequences of repo’s economic operation for accounting
  • Comparing legal structure and economic operation
    • Dual vocabulary of repo
    • Problem of re-characterization risk
    • Analogues to repo
    • Special case of US repo
    • “Repos” that are not repos

Session Two

  • Repo structures
    • Repurchase transactions
    • Buy/sell-backs --- undocumented and documented --- and the Buy/Sell-Back Annex
    • Variation of the structure of a repurchase transaction within GMRA
    • Fixed-rate
    • Floating-rate
    • Open repo
    • Forward repo
  • Risk management under the GMRA
    • Initial margin/Margin Ratio, haircut and the GMRA’s Transaction Exposure  Methods
    • Margin Maintenance calculations: concepts of Transaction Exposure and Net Exposure
    • Margin Maintenance implementation through Margin Transfer or Repricing/Adjustment
  • Repo: operational management
    • Custody (delivery, HIC, tri-party)
    • Collateral substitution
    • Failure to deliver collateral

Session Three
  • Default procedures under the GMRA
    • Events of Default, Acts of Insolvency
    • Automatic Early Termination, condition precedent
    • Default notices
    • Close-out netting
    • Valuation of cash (Repurchase Prices) and collateral (Default Market Value)
    • Other costs
    • Set-off
  • Legal issues arising from the GMRA by Ashurst
    • Re-characterization risk
    • Automatic  Early Termination
    • Use of representations
    • Corporate events and actions, including the case of the Greek default
    • Impact of the Financial Collateral Directive
    • Enforcement  of GMRA in foreign jurisdictions and conflict of law rules
    • Brexit
    • How to use legal opinions
    • Lessons from LBIE v Exxon and other cases
    • Legtech - automating repo documentation

Session Four
  • Negotiating a GMRA in practice - provided by Citibank
  • Tri-party repo - provided by Euroclear
  • CCPs - provided by LCH

Session Five
  • Collateral in sustainable finance
  • Regulation of repo
    • Basel capital and leverage ratios
    • Basel liquidity ratios (LCR and NSFR)
    • EU CSDR
    • EU and UK SFTR
  • ICMA legal update - provided by Lisa Cleary, ICMA

 

 

Livestreamed


ICMA courses are delivered via video conferencing accessed on our digital learning platform, using the most effective pedagogical approaches and incorporating interactive functions like virtual breakout rooms.

The live sessions of the "Understanding the GMRA" course are delivered in five 3.5 hour sessions over the course of two weeks. You will be given access to the course materials before the live sessions, and will have access to those for a total of six months. During these six months you will have the option to keep working through the course materials at your own pace.

Next datesTBC
Register your interest for this course at education@icmagroup.org


Livestreamed fees

Members: EUR 1,650 + VAT (if applicable)
Non-members: EUR 2,050 + VAT (if applicable)

Costs include full access to the online campus and associated learning materials. Please note that payment must be received before the start of the course.


Contact

Should you have any queries, please contact education@icmagroup.org.



Registration & Delegate Fees

ICMA Members: EUR 1,600.00 + VAT
Non-members: EUR 2,080.00 + VAT

Registration in advance is essential. Delegate fees are payable, in advance of the course start date, by invoice or credit card (Visa, MasterCard).
Registration

To register for this event, please click here.

Delegate Fees

ICMA Member: £1200 + 20% VAT
Non Member: £3500 + 20% VAT

Delegate fees are payable, in advance of the course start date, by credit card (Visa, MasterCard) only.
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