27.5 - GMSLA Provision

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2010 Global Master Securities Lending Agreement
A Jolly Contrarian owner’s manual™

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Clause 27.5 in a Nutshell

Use at your own risk, campers!
27.5 Automation: where this paragraph applies, each party may use third party vendors to process Loans and may disclose relevant Loan data to those vendors.

Full text of Clause 27.5

27.5 The Parties agree that where paragraph Schedule 12 of the Schedule indicates that this paragraph 27.5 applies, each may use the services of a third party vendor to automate the processing of Loans under this Agreement and that any data relating to such Loans received from the other Party may be disclosed to such third party vendors.

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 27.5
Comparison: Template:Osladiff 27.5

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Content and comparisons

Template:M comp disc GMSLA 27.5



Classic over-communication from ISLA’s crack drafting squad™. Nothing in the 2010 GMSLA says you can’t use a third party vendor,[1] and there are no confidentiality provisions, so plainly, this clause is not needed.

“But it won’t hurt to include it”, ISLA’s crack drafting squad™ must have thought.

Nor will painting a live camel with lentil soup.

But what it might do is cause confusion, angst, and alarm among the legal eagles staffing the negotiation, which in itself might prolong your agony for months. I am not just saying that. We know of one negotiation where the last outstanding point — for eight months, apparently — was “can we add a requirement for the mutual consent of both parties before anyone appoints a third party vendor?”

Sigh. In this day and age, third party vendors (the likes of MarkIt, Equilend, Thompson Reuters and so on) are a baked-in feature of the stock loan market. This is a bit like requiring consent from your car vendor before taking it to a service station for petrol.

ISLA’s crack drafting squad™ might think on this from a behavioural economics perspective: If this clause did not exist, no-one would imagine it needed limiting: it doesn’t say anywhere that you can’t use a third party vendor if that’s what you want to do, and, in the world of commerce, provided you don’t transgress your positive contractual obligations, you are free to do as you please. But, by saying it, you ask a silly question and invite a silly answer. Few assiduous attorneys will pass up the free opportunity to give one of those.

A third party vendor?

Note the rather clangorous dissonance between the party’s permission to appoint “a” third-party vendor top process its loans, and its approval to share relevant data with such vendors. A grammatical clanger from the ’squad, to be sure, but it somewhat undermines the scope for That Guy to raise the point in negotiations, or some subsequent squabble, that in permitting the parties to appoint one vendor this impliedly forbids them from appointing more than one.


See also



  1. In Mike’s immortal words from the Nasty episode, “Well it wouldn’t, would it? I mean, it doesn’t say “ensure you don’t chop up your video machine with an axe, put all the bits in a plastic bag and bung them down the lavatory.”