The International Capital Market Association (ICMA) has published updated legal opinions on the Global Master Repurchase Agreement (GMRA), the standard agreement used for international repo transactions.
The legal opinions now cover 55 jurisdictions, indicating both the extensive use of the GMRA and the increasing utilization of repo as a funding tool.
“The European Repo Council welcomes the publication of the updated legal opinions supporting the use of the GMRA, the standard documentation which has reduced the risk of cross border repo transactions and so allowed the market to grow rapidly over the past few years,” said Godfried de Vidts, chairman of ICMA’s European Repo Council. “The range of jurisdictions now covered is a clear indication of the widespread adoption of repo in many new markets.”
Both the UK Financial Services Authority (FSA) and the German Financial Supervisory Authority (BaFin) recognize the effect of netting provisions for regulatory capital and large exposure requirements provided that a legal opinion has been obtained that confirms the enforceability of such netting provisions and meets certain other requirements.
The 2007 opinions assist repo market participants using the GMRA in fulfilling those regulatory requirements.