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Updating the Loan Market Code and Principles

February 8, 2017 - This week a new LSTA working group met to launch an important and timely new project to review and update the LSTA’s Code of Conduct (the “Code”) and its Statement of Principles for the Communication and Use of Confidential Information in the Loan Market (the “Principles”).  The project is critical because the Code and the Principles are no less than fundamental bedrocks of the industry.  The purpose of the Code is to promote integrity, fairness efficiency and liquidity in the syndicated loan market by establishing general standards of trading conduct that are applicable to all loan market participants (“LMPs”) in connection with all loan market activities.  The purpose of the Principles is to outline broad guidelines for the receipt, use and distribution by and to LMPs of confidential information that is generally available in the loan market and that may at times include material non-public information (“MNPI”). 

The goal of the Principles is to address the thorny issues that arise by virtue of the fact that many LMPs also participate in the securities markets that transact solely on the basis of public information. The project is timely because so much has changed in both the loan market and in the SEC’s knowledge of and engagement with the loan market in the many years since the Principles and the Code were published, December 2006 and October, 2008, respectively.  While it is interesting to note that a quick review of the Code and the Principles suggests that they have held up quite well despite the passage of time and the many changes in the market, the working group will carefully review them and suggest revisions that reflect the new reality.  The goal of the working group is to publish revised documents before the end of the year.  If you are interested in participating in the working group please contact LSTA general counsel Elliot Ganz.  The LSTA is being advised on this project by Yoon-Young Lee a partner at WilmerHale in Washington and the Chair of its Broker-Dealer Compliance and Regulation Practice Group.

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