Background
For many years, ICMA has obtained and annually updated legal opinions on the Global Master Repurchase Agreement from numerous jurisdictions worldwide. For more information on GMRA, click here.
2021 GMRA legal opinions
ICMA members were informed about the publication of the 2021 GMRA Opinions in ICMA circular No.2 dated April 15, 2021.
Beneficiaries
The 2021 GMRA opinions have been obtained by ICMA, for the benefit of ICMA and its members1.
Agreement coverage
With the support of the ICMA European Repo and Collateral Committee, ICMA has discontinued coverage of the GMRA 1995 from 2019 onwards. The 2021 GMRA opinions cover:
- the GMRA 1995 as amended by the Amendment Agreement;
- the GMRA 1995 as amended by the 2011 GMRA Protocol (Revised);
- the GMRA 2000;
- the GMRA 2000 as amended by the 2011 GMRA Protocol (Revised);
- the GMRA 2011; and
- the GMRA 2011 as amended by the 2011 GMRA Protocol (Revised),
Scope
The 2021 GMRA opinions cover both the enforceability of the netting provisions of the GMRA as well as the validity of the GMRA as a whole. Furthermore, the opinions address the issue of recharacterisation risk (in respect of both the transfer of securities and the transfer of margin).
The UK Prudential Regulation Authority (PRA), the UK Financial Conduct Authority (FCA) and the German Financial Supervisory Authority (BaFin) recognise the effect of netting provisions for regulatory capital and large exposure requirements provided, inter alia, that a reasoned legal opinion has been obtained to the effect that, in the event of a legal challenge, the relevant courts and administrative authorities would find that, where a counterparty fails owing to default, bankruptcy, liquidation or any other similar circumstance, the regulated firm’s claims and obligations pursuant to the GMRA would be limited to a net sum under the law of the relevant jurisdiction(s), and which meets certain other requirements. The opinions which ICMA makes available to its members assist them in fulfilling these regulatory requirements. It remains the responsibility of each member individually to ensure that it meets its specific regulatory requirements.
Members must ensure that the specific opinions on which they seek to rely extend to their particular circumstances and satisfy themselves as to the strength of the opinions and the effect of the assumptions and qualifications contained therein.
Format
The 2021 opinions have been obtained in a combined format, covering the GMRA on the one hand and the GMSLA 2000, the GMSLA 2009 and the GMSLA 2010 (the “GMSLA”) on the other. The 2021 opinions cosist of the following parts:
(i) core opinion covering both the GMRA as well as the SLAs (the “Core Opinion”);
(ii) specific appendix covering the GMRA (the “GMRA part”); and
(iii) specific appendix covering the SLAs (the “SLAs part”).
Availability
ICMA makes available to its members the Core Opinion together with the GMRA part.
The Core Opinion together with the SLAs part will be available to ISLA members who are also subscribers to the ISLA Netting Opinions accessed via aosphere LLP's website (www.aoslogin.com). For further information contact ISLA at support@islaemea.org.
ICMA members may download the GMRA legal opinions and, where available, respective blacklines tracking the amendments to the previous year's opinions, by clicking here.
A list of the jurisdications covered by the GMRA legal opinions can be found at the bottom of this page.
1 Whilst associate members of ICMA have access to the ICMA legal opinions, the opinions are not addressed to associate members and therefore they cannot rely on them.