The International Securities Lending Association (ISLA) announced the launch of the ISLA clause library and taxonomy. The launch will help modernize the management of securities lending contracts.
Securities lending operations are not governed by carefully negotiated terms of contract. Firms’ relied on outmoded procedures to report critical information to financial authorities. Documentation and legal teams relied on manual processes that have remained unchanged for decades.
The ISLA clause library and taxonomy builds on the Global Master Securities Lending Agreements (GMSLA) preprint forms. However, each market participant tended to use their interpretation of the GMSLA. Consequently, similar business outcomes were being represented in different ways across the industry.
ISLA expects that the clause library and taxonomy will be a living document that will evolve with the market as members adopt new clauses, variants, or variables. In practice, it is expected to improve efficiency and reduce time in drafting, negotiating, and executing master trading agreements.
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