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Precedent of Legal Agreement

This paper does not override any contractual arrangements agreed between parties but instead outlines practical operational guidance for market participants during the course of their day-to-day collateral operations. This paper is intended to be read in conjunction with the Global Master Securities Lending Agreement (GMSLA: the master agreement) or equivalent agreement. In the event of a conflict between this paper and the master agreement, the master agreement should prevail. (IBP-101)



This paper is intended to provide a practical guide to managing the operational procedures of securities lending activity transacted using the GMSLA, and covers both lender and borrower counterparties. It should be noted that some parties may need to adapt the proposed practical processes described in this paper because of system restrictions or other inhibitors. In this situation, this should be agreed bilaterally between parties and where possible documented between parties. (IBP-102)



In the event of a dispute between parties, the Operation Executive committee will act as a reference point in relation to this paper. The Operations Executive committee is made up of senior representatives from the securities lending participants and reports directly to the duly elected ISLA Executive committee. (IBP-104)



ISLA member firms are domiciled in multiple jurisdications which may have local codes of conduct specific to that jurisdiction. If a conflict exists between ISLA Best Practice and and the local code, the code should prevail. It is recognised that some aspects of this paper remain at the time of publication aspirational for the market and therefore not common practice. In order to promote a standardised approach, parties to the GMSLA are encouraged to develop capabilities to meet the standards wherever possible. In these circumstances, counterparties should ensure they remain compliant with the Code. (IBP-103)


Agent Lender Disclosure

Where one counterpart represents multiple legal entities, the underlying legal counterpart should be communicated to the other party either on initial negotiation or via an agreed disclosure process. That disclosure may need to repeated on a daily in support of reallocation or regulatory obligations of one party. (IBP-297)


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