Market terminology - GMSLA Provision: Difference between revisions

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But there is '''no''' lending done under a {{gmsla}}: A “[[stock loan]]” contract comprises of an '''outright sale, by full title transfer''', of a stock, against a corresponding outright sale, by full title transfer, of collateral, and a right in the future to enter into opposing transactions, also outright sales by full title transfer, of {{gmslaprov|equivalent}} securities and collateral. Note equivalent has a special meaning: not "more or less the same" or "broadly similar" but "the exact same thing, from the same ISIN".
But there is '''no''' lending done under a {{gmsla}}: A “[[stock loan]]” contract comprises of an '''outright sale, by full title transfer''', of a stock, against a corresponding outright sale, by full title transfer, of collateral, and a right in the future to enter into opposing transactions, also outright sales by full title transfer, of {{gmslaprov|equivalent}} securities and collateral. Note equivalent has a special meaning: not "more or less the same" or "broadly similar" but "the exact same thing, from the same ISIN".


For the purposes of this commentary, however, the learning is this: moment you are delivered your security under a stock loan it is yours, to do with as you please, against all the world.
For the purposes of this commentary, however, the learning is this: moment you are delivered your security under a [[stock loan]] it is yours, to do with as you please, against all the world. As the article on [[stock loan]] explains, you will almost certainly want to sell it, immediately. Then you will be [[short]].


====Related Provisions====
{{seealso}}
*[[Stock loan]]

Revision as of 17:11, 1 November 2017

GMSLA Anatomy™


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2.3 Market terminology

Notwithstanding the use of expressions such as “borrow”, “lend”, “Collateral”, “Margin” etc. which are used to reflect terminology used in the market for transactions of the kind provided for in this Agreement, title to Securities “borrowed” or “lent” and “Collateral” provided in accordance with this Agreement shall pass from one Party to another as provided for in this Agreement, the Party obtaining such title being obliged to deliver Equivalent Securities or Equivalent Collateral as the case may be.


2010 GMSLA: Full wikitext · Nutshell wikitext | GMLSA legal code | GMSLA Netting

Pledge GMSLA: Hard copy (ISLA) · Full wikitext · Nutshell wikitext |
1995 OSLA: OSLA wikitext | OSLA in a nutshell | GMSLA/PGMSLA/OSLA clause comparison table
From Our Friends On The Internet: Guide to equity finance | ISLA’s guide to securities lending for regulators and policy makers

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2010 GMSLA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · 22 · 23 · 24 · 25 · 26 · 27 · Schedule · Agency Annex · Addendum for Pooled Principal Agency Loans

2018 Pledge GMSLA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · 22 · 23 · 24 · 25 · 26 · 27 · 28 · Schedule · Agency Annex

Stock lending agreement comparison: Includes navigation for the 2000 GMSLA and the 1995 OSLA

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Commentary

A point of great confusion in the market, given the unhelpful title of the agreement.

But there is no lending done under a 2010 GMSLA: A “stock loan” contract comprises of an outright sale, by full title transfer, of a stock, against a corresponding outright sale, by full title transfer, of collateral, and a right in the future to enter into opposing transactions, also outright sales by full title transfer, of equivalent securities and collateral. Note equivalent has a special meaning: not "more or less the same" or "broadly similar" but "the exact same thing, from the same ISIN".

For the purposes of this commentary, however, the learning is this: moment you are delivered your security under a stock loan it is yours, to do with as you please, against all the world. As the article on stock loan explains, you will almost certainly want to sell it, immediately. Then you will be short.

See also