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Collateral

Dynamics

Over many years, the securities lending market has
developed a broad and comprehensive framework for
the receipt and management of non-cash collateral. As
equities have become more prevalent as a collateral class,
service providers and tri-party agents in particular have
developed complex infrastructures and algorithms to
facilitate safe and efficient settlement and management
of collateral positions. Much of this experience and know-
how is providing an ideal starting point for those buy side
institutions that are subject to the rolling impacts of UMR
for non-centrally cleared derivatives transactions.

As we look more broadly across markets and the increas-
ingly important role that collateral plays, it is worth think-
ing for a moment about the role that securities lending
can play in helping to deliver safer and more liquid mar-
kets. Securities lending is a well-established practice with
a tried and tested legal framework that is built around the
Global Master Securities Lending Agreement (GMSLA).
Through our work to support the development of the
GMSLA, including the use of pledge collateral solutions,
these master agreements provide legal certainty. This is
not only important for risk mitigation purposes, but the
benefits accruing to institutions where they are able to
offset any loan and collateral positions from a regulatory
capital perspective, will often define business viability.
Aligned to this very point, ISLA commits to an annual

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