International Securities Lending Association (ISLA) and What It Is
The International Securities Lending Association or ISLA is an industry trade group that was founded to represent the common interests of the Securities Lending Sector.
With its headquarters in the United Kingdom, the main members are financial service firms from the UK and Europe. These said financial firms deal with insurance, asset and fund management and securities-related transactions. These financial institution members have worked with regulators from the UK and Europe regarding several key concerns.
One of their most important contributions is the UK Money Markets Code. What a financial instrument in the money market does is to infuse or diffuse quick cash in large denominations to or from an institutional buyer or seller. Examples would be a negotiable certificate of deposit, municipal notes and repurchase agreements or what is more commonly known as a repo.
The UK Money Market Code has strengthened the trust between the participants of these institutional firms. It has charted important points, particularly ethics, confidentiality execution and the settlements of said financial instruments.
Another important activity that the ISLA have participated in is the Global Master Securities Lending Agreement (GMSLA). This is immensely important for promoting trust and contractual documentation and execution, particularly for Europe as most of the institutions participate in trans-national market activities (i.e. buying and selling stocks and government debts for EU members).
The GMSLA has encompassed a lot of important points, for instance pointers on how to do substitution of collateral, how to gross-up taxes not related to manufactured payments on collateral, what to do when there is failure to redeliver equivalent securities or collateral and even how to do set-offs.
The ISLA also has a lot of primers on how to do securities financing transactions. They have guides on how to do Securities Lending and how to vote for corporate activities and elections when voting rights are present. They also have documentations and case studies, particularly on ETF (exchange traded funds) and for Dividend Arbitrage.
ISLA have not stopped with just those two high-level contributions; even until now they still work with regulators so that a more efficient and secure securities lending market will be enjoyed by everyone. With more than 130 institutions on their membership, good correspondence and cooperation can be made and maintained.
With the trust of the public slowly being made by ISLA, the financial markets should have better days now and in the future.