The 2015 GMRA legal opinions cover both the enforceability of the netting provisions of the GMRA as well as the validity of the GMRA as a whole.
Furthermore, the opinions address the issue of recharacterisation risk (in respect of both the transfer of securities and the transfer of margin).
The UK Prudential Regulation Authority (PRA), the UK Financial Conduct Authority (FCA) and the German Financial Supervisory Authority (BaFin) recognise the effect of netting provisions for regulatory capital and large exposure requirements provided, inter alia, that a reasoned legal opinion has been obtained to the effect that, in the event of a legal challenge, the relevant courts and administrative authorities would find that, where a counterparty fails owing to default, bankruptcy, liquidation or any other similar circumstance, the regulated firm’s claims and obligations pursuant to the GMRA would be limited to a net sum under the law of the relevant jurisdiction(s), and which meets certain other requirements. The opinions which ICMA makes available to its members assist them in fulfilling these regulatory requirements. It remains the responsibility of each member individually to ensure that it meets its specific regulatory requirements.
Members must ensure that the specific opinions on which they seek to rely extend to their particular circumstances and satisfy themselves as to the strength of the opinions and the effect of the assumptions and qualifications contained therein.
The link to the Opinions is available here.