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SPAIN
ANNEX
SPANISH GUIDANCE NOTES ON THE USE OF THE GMRA WITH SPANISH DEBT SECURITIES
1.
INTRODUCTION
1.1
These notes provide guidance on the use of the GMRA with Spanish Debt Securities (as
defined below). These notes provide a summary of relevant issues and should not be regarded as
constituting legal advice. Parties should consult with their legal advisers, tax advisers and any
other adviser they deem appropriate.
1.2
The Spanish Public Debt Market (“Mercado de Deuda Pública en Anotaciones”) operates
through the Spanish Public Debt Market Settlement System (“Central de Anotaciones de Deuda del
Estado” or CADE), which is run by Iberclear (Sociedad de Gestion de los Sistemas de Registro,
Compensación y Liquidación de Valores S.A.).
1.3
Members of the Spanish Public Debt Market can be of two types:
(a)
Account Holders (“titulares de cuenta”); and
(b)
Management Institutions (“entidades gestoras”).
1.4
Account Holders can trade in book entry securities on their own behalf. Account Holders
can also qualify as Management Institutions. Management Institutions maintain and operate the
accounts of those entities or individuals who do not have a direct book entry account in the Spanish
Public Debt Market system.
1.5
All the securities listed on the Spanish Public Debt Market are in book-entry form and
denominated in euros.
1.6
When entering into transactions involving Spanish debt securities, parties need to bear in
mind a number of factors because of the particular features of the Spanish Public Debt Market.
1.7
“Spanish Debt Securities” means: (i) debt securities which are registered on the Spanish
Public Debt Market (“Mercado de Deuda Pública en Anotaciones”); and (ii) debt securities
(including corporate debt securities) listed in other Spanish markets which apply the same rules and
operative procedures as those of the Spanish Public Debt Market.
1.8
Transactions and margin transfers in Spanish Debt Securities will be subject to the Spanish
Public Debt Market regulations. These regulations contain rules and operative procedures which
will prevail over the terms of the GMRA to the extent that they arise as a result of mandatory
provisions dictated by the Spanish Ministry of Economy, the Bank of Spain or any other duly
qualified public entity.
2.
SPANISH REPOS AND "SIMULTÁNEAS"
2.1
Parties may enter into two types of Spanish Public Debt Market transactions: “operaciones
con pacto de recompra” (Spanish Repos) and “simultáneas”.
2.2
Under a Spanish Repo the buyer of a given number of securities must sell back to the
seller, on the repurchase date. The securities subject to a Spanish Repo are identified by CADE
and must be sold back to the initial seller on the agreed date. The buyer is therefore entitled to
enter into subsequent repo transactions over the relevant securities provided that the maturity date
of the subsequent repo transactions is, at least, one day prior to the maturity date of the first
Spanish Repo.
2.3
Under a “simultánea”, the buyer of a given number of securities is entitled to sell back to
the seller, on the repurchase date, an equivalent number of securities; the buyer, therefore, may
enter into subsequent repo transactions over the relevant securities without having to commit
himself to repurchase any pre-identified securities in advance of the sell back date of the
“simultánea”.
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2.4
When entered into under the GMRA, both Spanish Repos and “simultáneas” will have the
benefit of netting in the event of Insolvency of a Spanish Party in, and subject to, the terms
described in paragraphs 2.5 to 2.7 of the Spanish ICMA Legal Opinion Update dated 31 March
2011.
2.5
Parties are advised to identify a Transaction (whether a repo or a buy/sell back transaction)
as either a Spanish Repo or a “simultánea” in the confirmation.
3.
ON DEMAND TRANSACTIONS
CADE only accepts on demand transactions if the parties to the transaction indicate a deadline for
the repurchase to occur. Accordingly, parties are advised to specify in the confirmation a maximum
period within which the Repurchase Date will occur.
4.
SUBSTITUTION
The Spanish Public Debt Market does not permit the transactions registered with it to be varied and
continue in effect. If the parties to a transaction wish to amend it, the transaction must be cancelled
and a new transaction must be entered into with new terms and conditions. Therefore, the
substitution provisions of the GMRA are not applicable to Transactions in Spanish Debt Securities.
5.
PROPOSED AMENDMENTS TO THE OPERATING PROCEDURES
According to the above-mentioned, the following amendments to the Operating Procedures are
proposed in the case the parties have agreed that:
(a)
the Transactions to which the SMF Terms and Conditions apply may include Transactions
in respect of which the Purchased Securities comprise or include Spanish Debt Securities
which are Spanish Repos (“operaciones con pacto de recompra") and “Simultáneas”, as
defined in the RDL 5/2005; and
(b)
a transfer of Margin Securities may consist of or include Spanish Debt Securities:
(i)
Part 4.7 (Substitution) should not apply.
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