Exclusive securities lending agreement
An exclusive securities lending agreement (“ESLA”) is an arrangement where a Lender grants a Borrower the exclusive right to borrow from a portfolio of securities. It is documented under a separate ESLA, an additional legal agreement governing the terms of the exclusivity. It covers a pre-agreed period and may include specific programme parameters and eligibility criteria.
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| Docs | Appendage to a stock lending agreement. Extra mark for needless verbosity. | 3 |
| Amendability | Bilateral. Easyt peasy. | 0 |
| Collateral | Yes, per stock lending agreement. Liquid, daily, but may be crappy assets. | 3 |
| Transferability | Not without novation. But why would you? | 0 |
| Leverage | Nope | 0 |
| Fright-o-meter | Well, it’s used in connection with short selling but really, snoresville. | 1 |
Conceptual question: is an ESLA a form of equity option? Should you figure it into your shareholding disclosure programme? Is it subject to EMIR collateralisation and all that guff?