Template:M gen GMSLA 5.4

ISLA Guidance

Here’s what Freshfields’ ISLA guidance has to say (though I can save you a read: it doesn’t really shed any further light):

Paragraph 5.4 sets out the margin maintenance provisions, that is, the market value of the collateral (provided in respect of all loans) is to equal the market value of all loaned securities together with an additional amount known as the “Margin” (as specified in the Schedule in relation to each type of acceptable collateral under the Agreement as a percentage of the market value of each form of acceptable collateral). When making this calculation account is also taken of

(i) amounts due and payable by either party under the Agreement but which are unpaid; and

(ii) if agreed between the parties and if the income record date has occurred in respect of any non-cash collateral and loaned securities, the amount or market value of income payable in respect of such non-cash collateral or securities.

The borrower has the right to call for excess collateral provided to the lender and the lender has the right to demand further collateral if a collateral deficiency exists.