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.
ISLA Members Webinar 20 Nov 13
The new UK and US Tax addenda to the GMSLA. (John Billige, State Street; and David Morgan PwC).
The joint ISLA/ ERC response to the FSB’s consultation. (Andy Dyson and Kevin McNulty, ISLA).
For those who were unable to make the webinar copies of the presenations can be found on the Members brieifng page here
If you require a members login please email firstname.lastname@example.org
Following extensive work by the ISLA Tax Group we are pleased to announce the publication of two new tax addenda for the GMSLA. The US addendum contains representations to be made by parties to the GMSLA to address certain US withholding tax issues arising in relation to Substitute Dividends under FATCA. The second addendum is an updated version of the UK tax addendum which has been developed in light of the impending abolition of the UK Manufactured Overseas Dividends regime on Jan 1st 2014.
The addenda published today are designed for the GMSLA 2010. We will publish a version of both addenda for the GMSLA 2000 shortly.
We are aware that under the existing UK tax addendum parties are required to notify each other if they cease to be an Authorised UK Intermediary (AUKI) or Authorised UK Collecting Agent (AUKCA). As AUKIs and AUKCAs will cease to exist from the 1st January we are investigating whether the notice requirement can be dealt with through some general form of communication.
As the addenda are quite technical we will be holding a webinar which will include an overview by John Billige (chair of the ISLA Tax Group) and David Morgan (PwC) of their purpose. The webinar will be held on November 20th at 4pm UK time and further details will be sent shortly.
As always firms are advised to obtain their own professional advice on taxation and legal matters.
ISLA Publishes ALD Best Practice Paper on the Approval of Principals
ISLA has published a best practice paper designed to help create consistency in the way the market uses the ALD system in Europe for the proposing and approval of principal lenders. The ISLA Agency Lending Disclosure Best Practice Paper aims to set certain recommended practice for Agent Lenders and Borrowers in the European securities lending market and describes high level responsibilities for both parties.
The aim of the paper is to increase efficiency in the process of notifying and approving principals. The paper can be found here.
BCBS Basel III - Leverage Ratio Framework Consultation
ISLA has submitted a response to the BCBS consultation document on a framework for the calculation of the Basel III leverage ratio. The consultation sets out a proposal for the calculation of the exposure measure (a key component of the leverage ratio) for secured financing transactions including securities loans. Our response, which follows feedback received from members and our update on the subject at a recent Legal and Regulatory Group meeting, supports some allowance for netting in the calculation of exposures for SFTs and also supports a submission from the RMA seeking clarification on the treatment of indemnified lending exposures. ISLA's letter can be found here and the BCBS consultation paper here.
This guide is intended to assist Depositaries in establishing their triparty collateral services under the new ESMA guidelines which come in to full force in February 2014.
FSB - Press Release 29 Aug 13
The FSB has published policy recommendations to strengthen the oversight of the Shadow Banking system.
A copy of the press release can be found here .
The FSB have also released three additional documents around the policy recommendations , one of which is on the policy framework and regulation recommendations surounding Securities Lending and Repos, we have a copy available here for your review .
The attached analysis on the impact of the proposed FTT which is under discussion by 11 member states of the EU can be found here.
The analysis shows that at least 65% of the European securities lending market would be rendered uneconomic by the tax and that this would have negative consequences for long term investors, the financial markets and the supply of collateral in the system.
We will be sharing this analysis with key policymakers.