Letter of Credit - GMSLA Provision

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

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Stock Loan owner’s manuals: 2010 GMSLA · 2000 GMSLA · Pledge GMSLA · OSLA

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GMSLA

Clause Letter of Credit in a Nutshell
Use at your own risk, campers!

Letter of Credit means an irrevocable, non-negotiable bank letter of credit acceptable to Lender;
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Full text of Clause Letter of Credit

Letter of Credit means an irrevocable, non negotiable letter of credit in a form, and from a bank, acceptable to Lender;
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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: There is no Letter of Credit in the 2018 Pledge GMSLA. Hence the redlink.
Comparison: Template:Osladiff Letter of Credit

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Content and comparisons

The Letter of Credit concept — a painful, formalistic and old-fashioned one, truth be told — didn’t make it from the 2010 GMSLA into the 2018 Pledge GMSLA, the theory being that the Borrower is engaged in raising finance - in the shape of liquid assets with decent credit quality that it can give back to its Treasury department, against the collateral of its portfolio of equities, convertible bonds and other dross it holds as collateral for its own margin lending activity. so what it would be doing collateralising such a trade with a bank-issued Letter of Credit you’d really have to wonder.
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Summary

... and a Letter of Credit is what, exactly?

An old fashioned form of credit support. A bank writes an unconditional letter promising to pay a (usually large) sum on money on demand and without argument to a third party on behalf of a client. This gets small companies a bit of breathing space with trade creditors. Banks charge through the nose for them: they are a form of committed funding.

Lots of formal rules and legal form-obeisance.
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See also

Template:M sa GMSLA 8.5
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References