Market terminology - GMSLA Provision

2010 Global Master Securities Lending Agreement A Jolly Contrarian owner’s manual™ Resources and navigation 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 Navigation 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 Loan owner’s manuals: 2010 GMSLA · 2000 GMSLA · Pledge GMSLA · OSLA Index: Click ᐅ to expand: GMSLA Pledge GMSLA Clause 2.3 in a Nutshell™ Use at your own risk, campers! 2.3 Market terminology Even though we say “borrow”, “lend”, “Collateral”, “Margin” etc. as participants do in the market, Securities “borrowed” or “lent” and “Collateral” provided under this Agreement pass by outright title transfer. view template Full text of Clause 2.3 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. view template Related agreements and comparisons Related agreements: Click here for the same clause in the 2018 Pledge GMSLA Related agreements: Click here for the same clause in the 1995 OSLA Comparison: Template:Gmsladiff 2.3 Comparison: Template:Osladiff 2.3 Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Content and comparisons

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Summary

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.

Beware: “equivalent” has a special meaning: “not more or less the same” or “broadly similar” but “the exact same thing, from the same ISIN”. Like, fungible.

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.

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See also

• Stock loan
• Equivalent
• Fungible

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