Stock loan ninja

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People Anatomy™
A spotter’s guide to the men and women of finance.
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Deep into the plumbing of the financial system, yesterday.
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Like an ISDA ninja only far, far rarer and, sadly, far less valuable. One steeped in the ways, conventions and oddities of the securities lending market. Au fair with the fact that, even though it is called a “loan”, it’s not — but it sort of is at the same time. One who understands what mini close-out is, how it works, why you would use it, and how it interacts with Default Under Specified Transaction under the ISDA Master Agreement. One who knows how a Buy-in works, and why.

Private practice lawyers — especially those from magic circle law firms — don’t have a scooby doo about the GMSLA (despite one such firm having written the damn thing) and as a result whenever they are called in to negotiate one — the odd European asset manager has been known to do this — things get weird, psychedelic, and heated at the same time, very quickly.

These days most stock loan agreement negotiations are handled by teenagers harvested from the Bratislavan gig economy. They do so after a long Uber shift, hiked up on No-Doz and with an out-of-date copy of the FT book about stock loans[1] on their lap, while referring to a tattered playbooks handed to them by the last school leaver who binned it after three months to work for a tech start up, so much of that subtlety is lost.

Jobbing inhouse lawyers field queries on the desk and have to make it up as they go along. This mostly works out okay, because market participants get sick of listening to their legal eagles blustering and blagging in thick slavic accents, so usually sort out their problems by themselves.

See also


  1. Well: A new one costs two weeks’ wages Transylvanian turnips.