The Overseas Securities Lending Agreement of 1995: An Overview
The Overseas Securities Lending Agreement (OSLA) of 1995 is an agreement between securities lending parties in different jurisdictions. It provides a framework for the lending of securities across borders and helps to establish a legal and regulatory framework for the transaction.
The OSLA is designed to facilitate the lending of securities by providing a standard set of terms and conditions for securities lending transactions. It includes provisions for the transfer of ownership of the securities, the payment of fees and interest, and the management of risks associated with the transaction.
The agreement was developed by the International Securities Lending Association (ISLA), which is a trade association representing the interests of the securities lending industry. The ISLA promotes the development of securities lending and collateral management practices globally and provides a platform for market participants to discuss industry issues.
The OSLA is particularly important for the securities lending industry because it creates a transparent and efficient market for borrowing and lending securities, thereby reducing risks for market participants. By establishing a legal and regulatory framework for securities lending, the OSLA helps to promote liquidity in global markets and creates economic benefits for all participants.
Some of the notable provisions of the OSLA include the following:
1. Transfer of ownership: The agreement provides for the transfer of ownership of securities from the lender to the borrower for the duration of the loan.
2. Payment of fees and interest: The lender is entitled to receive fees and interest for the securities that are lent. The fees and interest rates are determined by market conditions.
3. Management of risks: The OSLA includes provisions for the management of risks associated with securities lending, including credit, market, and operational risks.
4. Termination of the agreement: The agreement can be terminated by either party upon giving notice to the other party.
The OSLA has been widely adopted in the securities lending industry and is used by many market participants globally. The agreement has helped to promote transparency and efficiency in the securities lending market, which has led to increased liquidity and economic benefits for all participants.
The Overseas Securities Lending Agreement of 1995 is an important legal and regulatory framework for securities lending across borders. It provides a standard set of terms and conditions for securities lending transactions and helps to manage the risks associated with the transaction. The agreement has been widely adopted by market participants globally and has contributed to the development of a transparent and efficient securities lending market.