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

Practice notes

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

Practice notes

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 focuses 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 transferred from one party to another may be subject to a securities lending transaction.

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Joseph Wren

Travers Smith

Joseph is a partner in the finance department at Travers Smith, where he is part of the Derivatives & Structured Products Group. Joseph joined Travers Smith as a trainee in 2010 and became a partner in 2020.

He regularly acts for private equity and private credit funds, infrastructure and real estate funds, investment managers, asset managers, pension schemes and corporates. He also advises sell-side institutions such as banks and other financial institutions. Joseph is described by Legal 500 UK as "approachable, knowledgeable and commercial" and was recognised in the 2020 edition as a Rising Star. Joseph has also co-authored articles on the subject of derivatives and associated regulation for the Butterworths Journal of International Banking and Financial Law, International Financial Law Review and Private Equity News.

Jonathan Gilmour

Travers Smith

Jonathan specialises in derivatives and structured products from both a transactional and advisory standpoint. He is widely regarded by peers and clients as one of the leading specialists in his field. He counts among his clients some of the UK's largest and most sophisticated financial institutions, investment managers, private equity houses, challenger banks and occupational pension schemes. Jonathan regularly negotiates and advises on ISDA, GMRA and GMSLA documentation as well as the impact of related regulation including EMIR and SFTR. He also advises on the structure and documentation of bespoke transactions to hedge exposure to key market risks, including interest rate, inflation, FX and longevity; and advises on investment management, custody, clearing and collateral management arrangements, as well as pension scheme funding and risk transfer arrangements.

Jonathan's practice also includes advising clients on the inter-relationship between derivatives and ESG, sustainable finance, regulatory disclosure requirements and carbon trading.

Jurisdiction(s):

United Kingdom

Key definition:

Securities definition

What does Securities mean?

This is one of the groups of regulated investments defined in the regulated activities order (the other groups being identified as contractually based investments and others).

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