Market terminology - GMSLA Provision
2010 Global Master Securities Lending Agreement
Clause 2.3 in a Nutshell™
Use at your own risk, campers!
Full text of Clause 2.3
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A point of great confusion in the market, given the unhelpful title of the agreement.
But there is no lending done under a 2010 GMSLA: A “stock loan” contract comprises of an outright sale, by full title transfer, of a stock, against a corresponding outright sale, by full title transfer, of collateral, and a right in the future to enter into opposing transactions, also outright sales by full title transfer, of equivalent securities and collateral.
For the purposes of this commentary, however, the learning is this: moment you are delivered your security under a stock loan it is yours, to do with as you please, against all the world. As the article on stock loan explains, you will almost certainly want to sell it, immediately. Then you will be short.