Bills of Exchange Annex [610994]

Bills of Exchange Annex

PSA/ISMA Global Master Repurchase Agreement
Supplemental Terms or Conditions for Transactions in Treasury bills, local authority
bills, bills of exchange and certificates of deposit
Annex I, Part 2
1. Interpretation
In this Part of this Annex –
(a) the “ Agreement ” means the Agreement dated _____ substantially in the form of the
PSA/ISMA Global Master Repurchase Agreement (November 1995 version) of whichthis Annex forms a part;
(b) “ Bill” means an Eligible Bank Bill, a Local Authority Bill or a Treasury Bill;
(c) “ Eligible Bank Bill ” means a bill accepted by a bank whose acceptances are eligible
for discount at the Bank of England;
(d) “ Local Authority Bill ” means a bill issued by a UK local authority and eligible for
discount at the Bank of England; and
(e) “ Treasury Bill ” means a bearer security issued by the UK Government under the
Treasury Bills Act 1877 and the National Loans Act 1968.
2. Scope
2.1 The parties have agreed that the Transactions to which this Agreement applies may
include Transactions in respect of certificates of deposit and Bills.
2.2 The terms and conditions set out in this Annex shall apply to Transactions in respect
of certificates of deposit and Bills.
3. Equivalent securities
For the purposes of paragraph 2(p) of the Agreement, Bills shall be equivalent to other
Securities if they are of an identical amount and maturity and executed by the same parties inthe same capacities as those other Securities and, in the case of Securities which incorporateclausing, incorporate the same clausing as those other Securities.
4. Default Market Value
The provisions of paragraph 2(j) of the Agreement shall apply in the case of Bills as if
paragraph 2(j)(i) and (ii) were deleted and replaced with the following –
“(i) in the case of Securities to be delivered to the Defaulting Party,
(aa) if the non-Defaulting Party has between the occurrence of the
relevant Event of Default and the Default Valuation Time (as definedbelow) sold Securities equivalent to those Securities; the netproceeds of sale (after deducting all reasonable costs, fees andexpenses incurred in connection therewith) and

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(bb) failing such sale before the Default Valuation Time, the Market Value
of such Securities at the Default Valuation Time; or
(ii) in the case of Securities to be delivered by the Defaulting Party,
(aa) if the non-Defaulting Party has between the occurrence of the
relevant Event of Default and the Default Valuation Time purchasedSecurities equivalent to those Securities, the cost of such purchase(including all reasonable costs, fees and expenses incurred inconnection therewith) and
(bb) failing such purchase before the Default Valuation Time, the amount
it would cost to buy such Securities at the Default Valuation Time atthe best available offer price therefor (and where different offer pricesare available for different delivery dates, such offer price in respect ofthe earliest available such delivery date) on the most appropriatemarket, together with all reasonable costs, fees and expenses thatwould be incurred in connection therewith (calculated on theassumption that the aggregate thereof is the least that couldreasonably be expected to be paid in order to carry out theTransaction),”.
5. Maturity of Bills and certificates of deposit
If –
(a) for any Transaction, the Purchased Securities comprise certificates of deposit or Bills,
the certificates of deposit or Bills shall have a maturity date beyond the RepurchaseDate of that Transaction and;
(b) Margin Securities comprise certificates of deposit or Bills, the certificates of deposit or
Bills shall have a maturity date at least one day beyond the Repurchase Date of thelongest outstanding Transaction at the time such Margin Securities are transferred.
6. Guarantee of payment of Eligible Bank Bills
If either party delivers to the other any Eligible Bank Bills as Purchased Securities or Margin
Securities the first party –
(a) guarantees the due payment at maturity of such Eligible Bank Bills as though such
Eligible Bank Bills had been indorsed by the transferor; and
(b) undertakes to complete the indorsement of any such Eligible Bank Bill at any time
when called upon to do so.

PSA/ISMA Global Master Repurchase Agreement
Supplemental Terms or Conditions for Transactions in Treasury bills, local authority
bills, bills of exchange and certificates of deposit
This Annex I, Part 2 contains supplemental terms and conditions for transactions in local
authority bills, bills of exchange and certificates of deposit. These terms and conditions havebeen based on the agreement used by the Bank of England in its sterling money marketoperations.
Equivalent securities
The definition of equivalent securities in paragraph 2(p) of the GMRA has been amended. Bills
are treated as equivalent to other bills if they are of an identical amount and maturity andexecuted by the same parties in the same capacities as the original bills. In addition, if billsincorporate clausing, the equivalent bills must incorporate the same clausing as the originalbills.
Default Market Value
The definition of default market value has been amended so that it applies to bills by reference
to equivalent securities. This ensures that, where relevant, the dealing price of any billsbought or sold by the non-defaulting party will only be taken as the default market value if thesecurities include the same clausing as the original bills.
Maturity of bills and certificates of deposit
Where purchased securities for a transaction comprise certificates of deposit or bills, those
certificates of deposit or bills must have a maturity date beyond the repurchase date of thattransaction. Similarly, where bills or certificates of deposit are provided by way of marginsecurities they must have a maturity date at least one day beyond the repurchase date of thelongest outstanding transaction at the time of the margin transfer.
Guarantee of payment of Eligible Bank Bills
Paragraph 6 provides that a party who delivers to the other any eligible bank bills guarantees
the payment of the bill on maturity as if it has indorsed the bill itself and in addition undertakesto complete the indorsement of any eligible bank bill on demand. This means that thetransferor of an eligible bank bill assumes the risk of non-payment.