On 28 February 2022 ISDA published version 1 of its ‘2022 ISDA Securities Financing Transaction Definitions’ (the ‘SFT Definitions’). The purpose of the SFT Definitions is to enable parties to an ISDA Master Agreement to enter into ‘SFT Transactions’.
The main benefit of entering into an SFT Transaction under an ISDA Master Agreement (as opposed to, say, a GMRA or a GMSLA) is that both the derivatives transactions AND the SFT Transactions can be combined together in one netting set for the purposes of close-out – thus reducing credit risk.
Parties wishing to enter into SFT Transactions can incorporate the SFT Definitions into their contractual relationship by amending the Schedule to their underlying ISDA Master Agreement to incorporate a new ‘part [x]’. ISDA provides the pro-forma ‘part [x]’ within its 2022 ISDA Securities Financing Transactions Schedule Provisions (the ‘SFT Provisions’), which was also published on 28 February 2022.
Our long-proven expertise
DRS has long-standing expertise in all aspects of securities documentation – its specialist teams act and have acted for a number of major financial institutions as well as supporting custodian banks, from initial playbook-building, through document negotiation to final legal data upload.
Our clients trust us to manage their day-to-day contract requirements in accordance with their policies and processes. We reduce costs and our clients are left free to direct resource to other priorities. To provide cost certainty, we can deliver our service for a fixed price per agreement. In addition, our document management service is completely flexible, meaning we can scale up or down rapidly if your requirements change.
We can support you with minimal lead time and little upfront effort on your part as the challenge is completely familiar to us; it’s what we do. You can rely on us to be proactive and adapt to the unexpected. Our combined capability delivered from our centres in London and Newcastle allows us to deliver material cost savings without compromising quality or responsiveness.
Drawing on our expertise, we’ve created an in-depth guide to the SFT definitions, with commentary and guides to help you understand every part of the document.