Substitutions of Collateral - GMSLA Provision
2010 Global Master Securities Lending Agreement
Clause 5.3 in a Nutshell™
Full text of Clause 5.3
Related agreements and comparisons
Content and comparisons
The 2018 Pledge GMSLA does not have an equivalent provision. This is not for any reason that timidity — counsel drafting it (who shall remain nameless but once upon a time there was a bit of nominative determinism for those inclined to guess) thought it was a bit hard to deal with the security issues relating to substitution, so they just didn’t.
Unlike the 1995 English Law CSA, a Borrower under the 2010 GMSLA can require a Lender to switch Collateral posted to it with Alternative Collateral (provided it is acceptable to the Lender, which it will be if it meets the definition of Collateral and is listed in Schedule 1).
By contrast, under Paragraph 3(c) of the CSA, a switch of posted Collateral requires the consent of the holding party (see 3(c)(ii)). The FOA Exchange-Traded Derivatives Agreement is similar to the ISDA CSA.