Implementing a new stock lending platform for a pan-European asset manager

The Task

We were approached by a pan-European asset manager with over €500 billion of assets under management that was looking to implement a new stock lending platform. Their previous platform had closed around 10 years earlier and so the majority of their institutional knowledge had left the business. Having won the pitch for what was a new client of the firm, we were tasked with working closely with an external commercial advisor and an internal team to get the stock lending platform up and running without delay.

The Solution

It was readily apparent that the manager had a strong understanding of what they wanted to achieve but was in need of significant advice on a number of key requirements and potential obstacles. We began by providing "teach-in" support to the internal team, running a workshop on current market best practice as well as covering the legal framework, compliance, and risk parameters.

The manager also required a full suite of new transaction documentation and we worked with the internal team to draft a bespoke precedent Global Master Securities Lending Agreement (GMSLA) – the industry standard stock lending agreement. The precedent GMSLA was designed to demonstrate the manager’s credibility in the market as well as protect their interests and their underlying clients' interests. A key component of our work was making sure that the internal team had a developed understanding of each of the provisions, what the fallback position could be and how to negotiate the GMSLA on their own, empowering the internal team to be as self-sufficient as possible, minimising future external legal costs.

We led the first round of negotiations with half a dozen of the major investment banks that are the manager’s key stock lending counterparties, including Goldman Sachs, JP Morgan, Morgan Stanley, BNP Paribas, Barclays Bank Plc, and Credit Suisse. The first round of negotiations resulted in us developing a more considered sense of what these counterparties were most concerned about when dealing with the manager and its underlying clients. We used this knowledge to revise the precedent GMSLA, improving the agreement and helping to make subsequent negotiations more efficient, faster and cheaper.

The Outcome

Eighteen months on from initial instruction, we have established the manager as an ongoing client firm of the firm, providing advisory and transactional work for our Derivatives & Structured Products team. Through our support of the manager throughout implementation of their stock lending platform and by working alongside their internal team at each stage, we have reduced the amount of legal spend required by the manager as they are now able to handle more in house, coming to Travers Smith only in the most complex and high value situations.

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Jonathan Gilmour
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