ISLA creates new GMSLA
14 February 2019 London
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International Securities Lending Association (ISLA), in conjunction with Clifford Chance and key industry stakeholders, has developed a pledge collateral version of their existing Global Master Securities Lending Agreement (GMSLA).
ISLA noted that the development of GMSLA (Security Interest over Collateral 2018 version) provides an important alternative to the existing title transfer legal frameworks.
It also allows market participants to potentially optimise the consumption of binding capital constraints such as risk-weighted assets (RWA) as well as managing collateral reporting obligations more effectively, ISLA revealed.
The new agreement is based on the existing GMSLA 2010 and provides ISLA members with an alternative to the title transfer framework.
For ISLA members who would like to use GMSLA Security Interest over Collateral 2018 version, they have developed a security agreement that creates a security interest over the relevant collateral accounts.
According to ISLA, they have also worked with several tri-party service providers to develop tri-party collateral agreements that serve as control document between the borrower, lender and tri-party agent.
These additional documents are available for business undertaken using BNY Mellon, Clearstream, Euroclear and J.P. Morgan in their capacity as tri-party agent.
They have been reviewed by Clifford Chance to work alongside the GMSLA (Security Interest over Collateral 2018 version).
Additionally, in order to support the validity of the legal structure of the new framework, ISLA will also be making available a legal opinion from Clifford Chance.
Once available, ISLA will notify member firms accordingly, and the Security Agreements applicable to each of the tri-party agents are available via the ISLA website for member firms.
ISLA noted that the development of GMSLA (Security Interest over Collateral 2018 version) provides an important alternative to the existing title transfer legal frameworks.
It also allows market participants to potentially optimise the consumption of binding capital constraints such as risk-weighted assets (RWA) as well as managing collateral reporting obligations more effectively, ISLA revealed.
The new agreement is based on the existing GMSLA 2010 and provides ISLA members with an alternative to the title transfer framework.
For ISLA members who would like to use GMSLA Security Interest over Collateral 2018 version, they have developed a security agreement that creates a security interest over the relevant collateral accounts.
According to ISLA, they have also worked with several tri-party service providers to develop tri-party collateral agreements that serve as control document between the borrower, lender and tri-party agent.
These additional documents are available for business undertaken using BNY Mellon, Clearstream, Euroclear and J.P. Morgan in their capacity as tri-party agent.
They have been reviewed by Clifford Chance to work alongside the GMSLA (Security Interest over Collateral 2018 version).
Additionally, in order to support the validity of the legal structure of the new framework, ISLA will also be making available a legal opinion from Clifford Chance.
Once available, ISLA will notify member firms accordingly, and the Security Agreements applicable to each of the tri-party agents are available via the ISLA website for member firms.
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