Loan Recall to buy-in/close out - flow

Lender issues recall notification to borrower stating ISIN, Quantity and Settlement Date.

Notification should be received by the borrower at the latest one hour prior to the close of relevant market/exchange minus two business days or, if greater, the standard settlement cycle of the relevant market/exchange to allow satisfactory settlement.

The lender should include any further relevant information that might influence the criticality of settlement or sensitivity of timing.

Borrower to respond with ACK/NACK, confirming settlement date(s) and quantity.

In line with standard practice, automated solutions are preferred to ensure timely notification and acknowledgement(s)

Return instruction(s) should be agreed and booked in good time for the relevant settlement cycle.

It is noted that many securities lending parties can instruct within the standard settlement cycle, that being less than or equal to the standard market settlement cycle. If this is the intended arrangement, it should be bilaterally agreed.

Should the instruction fail to settle, or borrower fail to respond to the recall notification, lender should calculate and communicate related costs to borrower (see GMSLA 9.3 Failure by either Party to deliver)

Communication of cost should include SSI

Costs should be paid within one business day of the claim/notification (GMSLA 9.3.b)

On receipt of costs, the outstanding loan should be closed, and any collateral related to that loan returned to the borrower. (IBP-328)