Comparing UK and US secondary debt trading markets, with particular reference to the LMA v LSTA recommended terms for secondary trading
Produced in partnership with Diane Roberts of Reed Smith LLP
Comparing UK and US secondary debt trading markets, with particular reference to the LMA v LSTA recommended terms for secondary trading

The following Banking & Finance guidance note Produced in partnership with Diane Roberts of Reed Smith LLP provides comprehensive and up to date legal information covering:

  • Comparing UK and US secondary debt trading markets, with particular reference to the LMA v LSTA recommended terms for secondary trading
  • Governing law and legal concepts
  • Survival of documentation
  • Timelines
  • Delayed settlement compensation for par trades
  • Recourse structure—upstream reviews and predecessor-in-title representations
  • Termination on insolvency
  • Participations
  • Proceeds letters
  • Trading English law debt on LSTA terms

The UK and US secondary (private) debt trading markets are very similar when transacted on the suite of documents issued by the Loan Market Association (LMA) in the UK and by the Loan Syndications and Trading Association (LSTA) in the US.

For more information on the documentation, terms and mechanics for LMA secondary debt trades, see Practice Notes:

  1. Overview of the key documentation in a typical secondary debt trade

  2. Secondary debt trading—timeline of a typical trade

  3. Secondary debt trading—completing the trade confirmation, and

  4. Key provisions in the LMA standard terms and conditions for secondary debt trading

Historically, there has been a great deal of convergence between the two debt-trading regimes and conventions so that in most salient respects they are substantially similar. Nonetheless, the two-debt trading regimes and conventions contain some material differences as noted below.

Governing law and legal concepts

The LMA suite of documentation is governed under English law. Transfers of debt under English law typically take place by way of: (i) novation or (ii) assignment and assumption. Novation involves the termination of a contract and the creation of a new but identical contract being created, save for the parties to the contract. English law recognises the concept of trust independently of the mechanics of the acquisition of the debt. This means that a novation has no adverse