The International Securities Lending Association (ISLA) has published recommendations entitled ISLA Model for Agent Lender Disclosure in Europe Version 1.0 (the Recommendations). The Recommendations outline ISLA’s recommended model for daily disclosure by agent lenders of the details of European borrowers’ exposures to underlying principal lenders. The model has been designed to provide borrowers with the information they need to manage counterparty credit risk and calculate regulatory capital requirements under Basel 2.
The Recommendations will apply to all agent lenders operating on a pooled basis on behalf of clients in the European securities lending market. The Recommendations need not apply to agent lenders that segregate principals and collateral, or that segregate principals and use legally-robust collateral allocation letters agreed with borrowers. For UK-regulated firms, the FSA has stated that borrowers should be receiving daily information about their exposures at underlying principal level by 1 January 2010 at the latest.
View ISLA Model for Agent Lender Disclosure in Europe Version 1.0, (PDF 355KB), 16 July 2008