Existing Loans - GMSLA Provision

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

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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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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 to expand:

Clause 27.4 in a Nutshell
Use at your own risk, campers!

27.4 Supercession: Where this paragraph applies, from the date of this Agreement it will apply to all outstanding loans entered into under the securities lending agreements specified in the Schedule as if they had been entered into under this Agreement.
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Full text of Clause 27.4

27.4 The Parties agree that where paragraph 11 of the Schedule indicates that this paragraph 27.4 applies, this Agreement shall apply to all loans which are outstanding as at the date of this Agreement and which are subject to the securities lending agreement or agreements specified in paragraph 11 of the Schedule, and such Loans shall be treated as if they had been entered into under this Agreement, and the terms of such loans are amended accordingly with effect from the date of this Agreement.
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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 27.4
Comparison: Template:Osladiff 27.4

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Content and comparisons

There is no equivalent provision in the 2018 Pledge GMSLA. Agent lenders will need each principal’s consent before migrating loans from title transfer to pledge format, and (we can only surmise) it didn’t occur to ISLA’s crack drafting squad™ that no agent lender, let alone any principal, would ever want to have both title transfer and pledged collateral outstanding at any one time — and even if they did, as a practical matter this would impossible for brokers to reconcile in their trade monitoring and risking systems.

Since the nature of agency loans is that the master agreement is deemed to be a separate agreement between each principal and the dealer from the individual principal’s date of accession, nor does it make a difference that the master agreement between broker and agent may (and usually will) be executed before any individual principal is moved from one to the other. Anyway, this is angels on the head of a pin stuff, since no-one would take the point anyway.


A simple clean up provision to inherit all existing Loans under 1995 OSLAs and older 2010 GMSLAs.

The more pedantic will provide in Schedule 11 that those legacy stock lending agreements are all deemed terminated, and the super cautious might add, by way of wholly unnecessary clarification, that the extant loans are governed by the new agreement as a single agreement — but legally this doesn’t go much further than the text of para 27.4. If your netting engine is thrown for a loop by the existence of two live master agreements between the same counterparties (hey — it can happen) then formally terminating the superseded one for good order is a sensible step — but this is really an operational point more than a legal one.

Note also that, unlike an ISDA Master Agreement, a GMSLA can be terminated as a separate thing conceptual item, apart from all outstanding transactions under it.

See also

Template:M sa GMSLA 27.4