Fair market value under the GMRA: how fair is fair?

Fair market value under the GMRA: how fair is fair?

When securities have to be valued following a termination for default of a repo on Global Master Repurchase Agreement (GMRA) terms, the fall-back valuation basis is a determination by the non-Defaulting Party (NDP) of the “fair market value” of the securities. Two recent cases arising from the 2008 crash have demonstrated that a fair market value can be determined by reference to pricing indicators in a distressed and illiquid market, that fair market value is not an objective standard but a matter to be determined by the non-Defaulting Party in its discretion and that the court will interfere only if that determination is irrational or perverse.

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About the author:

Neeta started her legal career at Allen & Overy in 2008 in the midst of the global financial crisis and the collapse of Lehmans where she gained most of her paralegal experience.

Neeta also did a short stint in litigation at the Revenue and Customs Prosecutions Office in 2006. Neeta graduated with a 2:1 honours degree from University of London, Queen Mary College and went on to obtain a distinction from the College of Law in the Legal Practice. She has been working at Lexis Nexis since April 2013.