The TBMA Global Master Repurchase Agreement: What You Need to Know
The TBMA Global Master Repurchase Agreement, or GMRA, is a widely-used standardized agreement in the financial industry for repurchase agreements (repos). Repos are used as a short-term funding tool, in which one party (the seller) sells securities to another party (the buyer) with an agreement to repurchase the securities at a later date at a predetermined price.
The GMRA was developed by the Dutch Securities Institute (DSI) in collaboration with the International Securities Market Association (ISMA), now known as the International Capital Market Association (ICMA). It was first published in 1992 and has since been updated several times, with the most recent revision in 2011.
The GMRA is designed to provide a standardized framework for repurchase agreements across different jurisdictions and counterparties. It includes provisions for obligations, covenants, representations and warranties, events of default and termination, and other important terms and conditions. It also specifies the applicable law and jurisdiction for the agreement.
The GMRA has been widely adopted in Europe, Asia, and other regions, but it is not as commonly used in the United States. Instead, the International Swaps and Derivatives Association (ISDA) has developed its own standardized repurchase agreement, known as the Global Master Repurchase Agreement (GMRA) for the U.S. market.
One of the key benefits of using the GMRA is its ability to reduce legal and operational risks associated with repos. By providing a standardized framework, the GMRA helps to facilitate transactions and reduce the time and costs associated with negotiating individual agreements.
The GMRA also includes provisions to address issues related to collateralization, such as the valuation and segregation of collateral and the responsibilities of the parties in the event of default. This helps to ensure that both parties are protected in the event of any unforeseen circumstances.
Overall, the TBMA Global Master Repurchase Agreement is an important tool for the financial industry, providing a standardized and efficient framework for repo transactions. Its widespread adoption is a testament to its effectiveness and reliability in reducing risk and facilitating transactions.