An introduction to securities lending transactions and the Global Master Securities Lending Agreement (GMSLA)
Produced in partnership with Joseph Wren of Travers Smith and Jonathan Gilmour of Travers Smith

The following Banking & Finance practice note produced in partnership with Joseph Wren of Travers Smith and Jonathan Gilmour of Travers Smith provides comprehensive and up to date legal information covering:

  • An introduction to securities lending transactions and the Global Master Securities Lending Agreement (GMSLA)
  • What is securities lending?
  • Ongoing payments/deliveries:
  • Termination Date:
  • What is the difference between securities lending and repo?
  • Why do parties enter into securities lending transactions?
  • Covering a short position
  • Creating a short position
  • Liquidity swap/collateral upgrade
  • Key legal issues in securities lending transactions
  • More...

An introduction to securities lending transactions and the Global Master Securities Lending Agreement (GMSLA)

Coronavirus (COVID-19): This Practice Note contains information on subjects potentially impacted by the government and regulators' responses to the coronavirus (COVID-19) outbreak. We are reviewing our content on the basis of information available and will keep it under regular review. For information on key developments and related practical guidance on the implications for lawyers, see: Coronavirus (COVID-19) toolkit and Practice Note: Coronavirus (COVID-19)—implications for structured products and securitisation transactions.

What is securities lending?

A securities lending transaction typically involves the outright transfer of a security by one party (the 'lender') to another party (the 'borrower') in exchange for the outright transfer of collateral by the borrower to the lender, with a simultaneous agreement between the parties that the borrower will return the loaned security to the lender at a future date in exchange for the return by the lender to the borrower of the collateral.

In 2018, the International Securities Lending Association (ISLA) released documentation which allows parties to exchange collateral by way of security (rather than outright transfer). This Practice Note will focus on securities lending transactions backed by the outright transfer of collateral, with a summary of the newer security interest structure (and the key differences as compared to using title transfer collateral) set out below.

Any asset that is capable of being

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