Template:M summ GMSLA Equivalent
This is a beast of a provision to parse. What I think it means in summary is set out in the panel to the right.
The key thing is that “equivalent” doesn't mean “similar” or “somewhat like the thing I gave you”. It means EXACTLY THE SAME THING. Same CUSIP; same ISIN. Fully fungible. Nothing else will do. Accept no substitute. The only distinction that “equivalent” permits is that the security does not have to be the precise security, down to the individual certificate number, that I gave you, as long as it is identical to and fungible with it.
The reason for that is that a stock loan is a title transfer arrangement: since you are free to do with the stock I gave you as you please, you can (and probably will) sell it to someone else. So I can't very well expect you to give exactly the same item back to me. It’s not a loan, after all. And actually if I were able to ask for the same item back, it would interfere with the legal characterisation of our stock loan as a title transfer arrangement. If you’re the sort of person that likes a true sale opinion.
Techy linguistic aside: Now here’s a funny thing. In the 2000 GMSLA, there were four defined terms relating to the Securities and Collateral that pass between the parties to a stock loan, all of them nouns:
This means you can move from the utterly tiring “Securities, Collateral, Equivalent Securities or Equivalent Collateral” which is fire-hosed throughout the 2000 GMSLA to the less offensive “Securities, Collateral or their Equivalents” in the 2010 GMSLA.