In 2019, one of the main developments in the repo and securities lending market was the decision of the International Capital Markets Association (ICMA) and the International Securities Lending Association (ISLA) to end the coverage of a number of master`s contracts in their legal opinions from 2019 and remove them de facto. What options are available to market participants who continue to rely on these agreements discovered when they put in place coverage? There are three options: However, IsLA stated that it had accepted the change, as participants continued to use the old agreements. The annual compensation cycle runs from April to March. ISLA said that to avoid doubts, the netting opinions it will publish in April of this year will cover the old agreements. The decision was made because the old contracts are more than 20 years old and ISLA continues to push members to re-conclude GMSLA in 2010. Legal opinions include both the applicability of the compensation provisions of the contract concerned and their validity as a whole. Regulators require that securities deposits and loans be recorded in robust written legal constructs, such as GMRA, supported by regularly updated legal advice, as a condition for recognition of credit risk reduction through guarantees and for the closing of clearing for the calculation of regulatory capital requirements and large risks. Gilt Repo stock and equity credit data are available from 1996 for the end of February, May, August and November. Data are typically published on the 21st business day of the second month following the end of the reference period in the application pension plan and equity loans (Table D3.1). The recathing and pension transactions are those carried out under the Legal Renuscaing Agreement (composed of TBMA/ISMA Global Master Repurchase Agreement with gold annex) or equivalent documents. Transaction valuations reflect the cash amount of each current transaction.
Current transactions are transactions that have been made but for which the second section has not yet been settled. Borrowing and lending transactions are those executed under the Loan-Edged Stock Lending Agreement or equivalent documentation. Transactions are generally shares against shares, not cash; Valuations reflect the value of the borrowed or borrowed shares, not the collateral against them, which normally contains the margin. The guarantee of an equity loan or an equity loan is obviously not accounted for separately, as this would lead to a double count. Sell/Buy Back and repurchase transactions are “undocumented” sales and repurchase transactions conducted without a comprehensive legal agreement. Sell/Buy Back and repurchase transactions under the applicable repo Legal Agreement are included under rest and reverse rest. These data do not distinguish between general collateral deposits (GC) (unspecified gilding used as “guarantees” against cash loans) and special deposits (specific gilding that is difficult to borrow, which are normally repoed to cover a short position in the stock). Transactions with residual maturities of one month, three months or six months are included in the shorter time range. All figures are reported gross by compensation with the same consideration (although they may be billed for prudential or accounting purposes). In addition, the costs of obtaining advice on old contracts can be better used to expand jurisdictional coverage and additional objections to existing ones. FinTrU can assist our clients by providing experienced repo and securities lenders for the development, trading and execution of updated securities financing documents and by making them compliant with the 2019 legal advice requirements.
