ISLA and ICMA are pleased to announce the publication of an explanatory briefing on “The Impact of IRRD on Repurchase Transactions & Securities Lending Transactions”.
With EU Member States needing to apply the new IRRD rules from January 2027, this timely publication, supported by Clifford Chance, sets out a number of important issues for ISLA members.
Tina Baker, Head of Legal Services, ISLA Connects Lead, ISLA, commented “I’m pleased to publish this paper to inform our members of the upcoming IRRD regulation and outline a path forward to ensure they stay ahead of these changes.”
The paper can be accessed by clicking here.
See below for short explainer on what the IRRD is and why its important for our members.
The Background
The IRRD, modelled on similar principles to the earlier BRRD, provides a framework for the recovery and resolution of EU insurance companies and reinsurance companies and their holding companies, where they are failing or likely to fail.
The Impact on Securities Lending & Repo
The IRRD resolution powers, which include suspending contracts and modifying obligations, could impact certain provisions vital for Securities Lending and Repo transactions.
The Safeguards
To mitigate this, IRRD mandates that Member States incorporate specific legal safeguards to protect these linked contracts. Crucially, in a resolution situation, only these IRRD-specific safeguards apply, overriding existing protections for financial collateral arrangements.
Amendments to the Master Agreements
The IRRD requires insurance companies to include bail-in and resolution stay recognition clauses in the GMSLA & the GMRA governed by non-EU law.
Regulatory Technical Standards (RTS)
RTS to be developed by EIOPA and will specify the drafting of the resolution stay recognition clause for inclusion in all types of master agreements. EIOPA aims to finalise the drafting by the end of March 2026.
Members may wish to engage with this by considering the details of the consultation proposals and commenting on the proposed language on behalf of their institution.
The Deadline
EU Member States must apply the new IRRD rules from January 2027.
