Repo Master Netting Agreement

16. Dezember 2020 Aus Von ROCT

– The European emir 648/2012 regulation, which has been in force in Italy since 1 November 2012 (including by development decree called „Decreto Sviluppo“), to transmit, both in traditional markets and in these over-the-counter markets, all standardised contracts at central repository (trade register) held in Italy by the Consob and the Bank of Italy (Italian Central Bank). In addition, the EMIR regulation provides for the obligation to inform these competent national authorities of net short positions on officially listed Italian stocks and government bonds. In addition, it provides for the obligation to compensate the negotiations with central counterparties (in Italy, the „Bank of Italy“ as an entity authorized to ensure execution) for both short selling and CDS (credit default swaps, i.e. derivatives that ensure the risk of default of other securities). The GMRA contract schedule is a standard master contract for REPO transactions, which can also be qualified in Italy as a clearing agreement. „Repo“ transactions are the sale and repurchase of securities for which a sale is made with an agreement for the seller to repurchase the securities at a later date. The feed-in price should be higher than the original selling price, the difference that represents actual interest, sometimes called the REPO rate. The party that originally purchased the securities actually acts as a lender. The original seller effectively acts as a borrower and uses the guarantee as collateral for a secured cash loan at a fixed interest rate. Therefore, an REPO is a cash sale related to a futures contract in which the difference between the futures price and the spot price is actually the interest rate on the loan, while the settlement date of the futures contract is the maturity date of the loan. A number of „REPOs“ usually require a master contract between buyer and seller (usually standardized by SIFMA/ICMA organizations).

Finally, GMRA is a master agreement that is qualified in Italy as a bilateral clearing agreement (compensation agreement) and related transactions are, with GMRA, a single instrument in accordance with the contract, consisting of the master, the form of confirmation (of each transaction) and the specific conditions.