Following the initial launch of the new GMSLA “Pledge” Structure Documentation, ISLA is delighted to publish a series of supporting Frequently Asked Questions (FAQs). The document is available for download here.
As part of its commitment to support the use of global master agreements, ISLA in conjunction with Clifford Chance and key industry stakeholders has developed a pledge collateral version of our existing Global Master Securities Lending Agreement (GMSLA). 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 the Global Master Securities Lending Agreement (Security Interest over Collateral 2018 version), we have developed a Security Agreement that creates a security interest over the relevant collateral accounts. We have also worked with several Tri-party service providers to develop Tri-party collateral agreements that serve as a control document between the Borrower, Lender and Tri-party agent.
These additional documents are available for business undertaken using Bank of New York Mellon, Clearstream, Euroclear and JP Morgan in their capacity as Tri-party agent, and have been reviewed by Clifford Chance to work alongside the Global Master Securities Lending Agreement (Security Interest over Collateral 2018 version).
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 we will notify member firms accordingly.
The Security Agreements applicable to each of the Tri-party agents are available via the ISLA website for member firms. To have access to the relevant Tri-party Control Agreement (“TACA”) however, please contact your designated relationship manager.
The development of the Global Master Securities Lending Agreement (Security Interest over Collateral 2018 version) provides an important alternative to the existing title transfer legal frameworks, and allows market participants to potentially optimise the consumption of binding capital constraints such as Risk Weighted Assets (RWA) as well as manage more effectively collateral reporting obligations.