.jpg)
The International Securities Lending Association (ISLA) has released the final bankruptcy remoteness opinion to support the global master securities lending agreement (GMSLA) written under Belgian Law by Freshfields Bruckhaus Deringer.
The GMSLA is the legal documentation framework used in the vast majority of securities lending transactions, first published in 2010, with a second version accomodating pledged collateral released in 2019.
ISLA says the addition of Freshfields’ opinion under Belgian law completes the GMSLA documentation suite.
Bankruptcy remoteness is the terminology used to define the legal standing of a company whose bankruptcy would have a limited economic impact on other entities within the same corporate group.
The opinion concludes that confirmation of the bankruptcy remoteness of the posted collateral would be of benefit to all ISLA members using the pledge structure.
Freshfields assessed the nature of the borrower’s rights in the pledged collateral and the impact on those rights of the insolvency of the custodian and the lender within Belgium, including the jurisdiction of the governing law of the security interest, the jurisdiction of incorporation of the custodian, and the jurisdiction of the location of the securities accounts.
The latest opinion was requested by the ISLA Legal Steering Group, which oversees the development of the GMSLA legal suite.
The association says it is "pleased that it was able to act on the recommendation of the group to further the development of the ISLA pledge documentation".
ISLA has been building out the legal foundation under the newer GMSLA which supports pledged collateral since it launched.
Freshfields has previously supported ISLA by issuing opinions on bankruptcy remoteness under English and New York law.
The association also gained a legal opinion on bankruptcy remoteness under Luxembourg law from Arendt & Medernach.
In February, the pledge GMSLA documents were amended to recognise BNY Mellon SA/NV as a
collateral manager.
