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Feedback from ISLA on ICGN Global Governance Principles


ISLA Feedback to the International Corporate Governance Network (ICGN) on its draft Global Governance Principles.

ISLA has provided feedback to the ICGN on its draft Global Governance Principles. The draft principles include a section on stock lending which deals with the issue of shareholders recalling shares if they wish to vote. We have suggested a number of changes to the ICGN draft language and a copy of our response letter can be found here.

Given the issues to do with the interaction of securities lending and corporate governance that occasionally get raised, ISLA decided to join the ICGN last year with the objective of developing stronger ties and an open dialogue with the corporate governance community.


ISLA response to Central Bank of Ireland’s consultation CP77


ISLA response to Central Bank of Ireland’s
consultation CP77: Consultation on publication of UCITS rulebook.


Please find attached here ISLA's response to the Central Bank of Ireland's consultation paper concerning amendments to the UCITS Rulebook for you information.

The response was prepared following discussions with the UCITS working group and I would like to thank them for their help in this matter


ESMA - UCITS Guidelines Consultation update


ESMA has now published it’s revision to the Guidelines following consultation. We will produce a fuller analysis but ESMA has listened to arguments from us and other market associations and extended the new collateral diversification requirements to all UCITS and not just money market funds as proposed. Under the new guidelines, UCITS that receive collateral from any one issuer of more than 20% of its NAV are required to make additional disclosures, and ESMA further requires that collateral must be diversified across at least 6 different issues.

The new Guidelines can be found here.


ISLA responds to ESMA’s consultation document


ISLA responds to ESMA’s consultation document “Revision of the provisions on diversification of collateral in ESMA’s guidelines on ETFs and other UCITS”.


ISLA has submitted a response to ESMA’s consultation on proposals to amend the collateral diversification rules contained in its guidelines for ETFs and other UCITS. The current guidelines require that no more than 20% of the NAV of a UCITS may be held in collateral from any one issuer. In the consultation ESMA consider allowing a derogation from this provision for government issued collateral in certain circumstances. The proposal is that this derogation should be limited to money market fund UCITS only to allow them to use higher volumes of reverse repo against a single government issuer.

ISLA argues that whilst it supports the proposal, the derogation should be available to all UCITS (not just MMFs). A copy of ISLA’s response can be found here.



Draft EU regulation on reporting and transparency of SFTs


Draft EU regulation on reporting and transparency of SFTs – Clifford Chance Briefing

Further to our announcement last month you may be interested to read a briefing note from Clifford Chance on this development. The briefing note can be accessed here.


Bye- Election Results


We are pleased to announce that following the recent bye-election Arne Theia from Unicredit Bank has been elected to the ISLA Board.



ISLA response to the UK Law Commission's consultation paper CP 215



ISLA has submitted a response to the UK Law Commission's consultation paper  CP 215: FIDUCIARY DUTIES OF INVESTMENT INTERMEDIARIES. The paper is a follow up to the Kay Review to which ISLA previously responded and asks whether the FCA should consider further regulation of the securities lending activity of custodians (particularly in relation to the payment of fees). ISLA argues that existing FCA regulation  in this area (alongside the more recent Guidelines for UCITS issued by ESMA) is sufficient for dealing with any concerns. The consultation paper can be found here and ISLA's response here.


Job Opportunity at ISLA




A Job opportunity at ISLA for an Analyst
 for further  details please go to  the website below .


ISLA Publishes Tax Addendum for the GMSLA 2000 Agreement and Notice Requirements under existing forms


ISLA Publishes Tax Addendum for the GMSLA 2000 Agreement and Notice Requirements under existing forms


Following our earlier communication we are pleased to advise that a version of the new UK Tax Addendum for the GMSLA 2000 agreement has now been published on the ISLA website. The addendum deals with changes to the UK Manufactured Dividends Rules regime (MOD) which will be effective from 1st January 2014. As previously advised an addendum for the 2010 GMSLA has been published and both documents can be found on the ISLA website here.

Notice requirement under existing Tax Addendum concerning AUKI and AUKCA status

One consequence of the change to the MOD regime is that from 1st January all parties will cease to be AUKIs or AUKCAs. Under previous versions of the GMSLA UK tax addenda parties are required to notify each other if their AUKI or AUKCA status changes. Given that the change affects all existing AUKIs and AUKCAs we have been considering whether there might be a simplified option for dealing with this notice requirement on a market-wide basis. Whilst we are making this announcement on the ISLA website we have been advised that strictly this is unlikely to be sufficient (in contract law terms) to render existing undertakings inapplicable.  We would therefore encourage parties to update their UK tax addendums, which would effectively resolve the matter.   As always with regards to legal and tax matters, we strongly encourage firms to seek their own professional advice if they have any concerns


ISLA and ICMA European Repo Council submit response to FSB on haircut policy proposals


ISLA submitted a joint response along with the ERC to the FSB’s consultation on haircut regulation. The policy proposal (which can be found here) is broadly designed to dampen perceived system risks concerning procyclicality in the secured financing markets. The proposals include a recommendation that all market participants should use methodologies when setting haircuts and that certain financing transactions should be subject to minimum haircuts. Whilst we are supportive of a policy that requires market participants to consider methodologies and believe that the numerical floors proposed are acceptable we express some concerns that the scope and wording of the policy proposals which could have negative consequences for the securities lending and repo markets. We make certain suggestions to the FSB for changing the scope and application of the proposals which we believe are still consistent with their overall policy objectives but which should lessen any unnecessary negative impacts on our markets. The letter also includes our joint comments on the final policy recommendations – in particular a suggested approach for developing transparency measures. Our response can be found here.