GMRA 2011 Russian Annex


Paul Harding, Chairman of Derivatives Documentation Limited, has written the following brief summary on the GMRA 2011 Russian Annex and would like to share it with you.

On 20th February 2013 ICMA published a Russian Annex to the GMRA 2011.

Cross border repo trading has been growing in Russia for several years and the publication of this Annex follows amendments made in 2011 to Russian insolvency and securities markets laws. Key among these was the recognition of close-out netting in the bankruptcy of a Russian counterparty which had used an eligible master agreement to cover his trades. The GMRA is an eligible master agreement in Russia for repo trades. In Russia repo trades are recorded at a trade repository called the National Settlement Depository.

The Annex itself is divided into 3 Paragraphs and presupposes that at least one of the parties will be a Russian entity.

The terms of the Russian Annex will prevail if it clashes with the GMRA 2011 itself or any other Annex to it.

Paragraph 3(a) of the Russian Annex lists 10 Acts of Insolvency which supplement those in the GMRA 2011’s Act of Solvency definition in its Paragraph 2. These Russian Acts of Insolvency are both shorter and more streamlined than the ones commonly seen in ISDA Master Agreement Schedules with Russian counterparties.

The Russian Annex also covers amendments to the definition and mechanics of Termination both in the normal course of business and upon early termination following a default.

Paragraph 4(f) of the GMRA 2011 concerning Cash Margin is amended as are Paragraphs 10(b)-(d) concerning aspects of close-out. Notable here is that Transactions subject to Automatic Early Termination will be deemed to be terminated on the day before the Act of Insolvency occurred. In Paragraph 10(d) elements for calculating the Early Termination Amount are set out in full. The last paragraph states which party will receive the Early Termination Amount depending upon whether its calculation results in a positive or negative figure.