ISLA releases SRD II guide
21 August 2020 London
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The International Securities Lending Association (ISLA) has published a new Shareholders Rights Directive (SRD II) guide for members.
Clifford Chance was appointed to review how the revised directive would apply in several securities lending scenarios once it comes into effect on 3 September.
SRD II will require asset managers to disclose their policy on securities lending to institutional investors and how it is applied to fulfil its engagement activities, particularly ahead of the general meeting of the investee company.
Among SRD II’s primary aims is to crack down on the misuse of voting rights, which were previously abused in several ways including via the borrowing of shares ahead of key corporate action dates to influence the result of company votes.
Following its review, the law firm produced several ‘pro forma’ letters aimed at offering general guidance to triparty collateral managers, agent lenders and their clients.
The letter for agent lenders sets out how they will comply with any obligations falling onto them as an intermediary under SRD II.
Two additional letters for triparty collateral managers, consider their obligations as an intermediary under SRD II in relation to title transfer and security interest collateral arrangements.
The documents were commissioned by ISLA’s SRD II working group, chaired by J.P. Morgan’s Rickie Smith, which has also compiled the Clifford Chance’s initial feedback into a Q&A document.
Members of the working group recently spoke exclusively to SLT to offer a deepdive in what the various constituents of the securities finance market should be doing ahead of next month's go-live and beyond.
Clifford Chance was appointed to review how the revised directive would apply in several securities lending scenarios once it comes into effect on 3 September.
SRD II will require asset managers to disclose their policy on securities lending to institutional investors and how it is applied to fulfil its engagement activities, particularly ahead of the general meeting of the investee company.
Among SRD II’s primary aims is to crack down on the misuse of voting rights, which were previously abused in several ways including via the borrowing of shares ahead of key corporate action dates to influence the result of company votes.
Following its review, the law firm produced several ‘pro forma’ letters aimed at offering general guidance to triparty collateral managers, agent lenders and their clients.
The letter for agent lenders sets out how they will comply with any obligations falling onto them as an intermediary under SRD II.
Two additional letters for triparty collateral managers, consider their obligations as an intermediary under SRD II in relation to title transfer and security interest collateral arrangements.
The documents were commissioned by ISLA’s SRD II working group, chaired by J.P. Morgan’s Rickie Smith, which has also compiled the Clifford Chance’s initial feedback into a Q&A document.
Members of the working group recently spoke exclusively to SLT to offer a deepdive in what the various constituents of the securities finance market should be doing ahead of next month's go-live and beyond.
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