May 22, 2019 - On May 17th the LSTA published revised LSTA trading documents in final form. These trading documents will govern all trades entered into on or after May 17th. We highlight to you that there will be some currently open trades that are still governed by trading documents that went effective on June 9, 2017 so there will be a period where both sets of documents will need to be used. We thank the Trade Practices and Forms Committee for their hard work and dedication on this project. We also thank our external counsel, Rich Levin at Jenner & Block, for his terrific help with this project.

Some of the modifications found in the May 17th documents include:

  • Proceeds Letter. This document was the Trade Practices and Forms Committee’s original point of project focus. Most of the form has held up well since it was published over ten years ago, but the consensus of the group was to broaden the disgorgement provision found in Section 7(c). We note that there has been one change to the May 1st exposure draft which is the addition of a drafting footnote in Section 7(c). In the process of reviewing the form of Proceeds Letter, a few further changes were made which impact the Proceeds Letter as well as the other trading documents. These conforming changes, which have also been vetted by the Trade Practices and Forms Committee, were made to clarify that:

FATCA withholding provisions. Provisions now refers to withholding generally and not only “FATCA withholding”.

Voting. In the Voting provisions, Seller’s carve outs from taking an action now relate to the instructions of Majority Holders or Majority Claim Holders, as the case may be, as well as Buyer’s instructions.

ERISA/Vacated Fiduciary Rule. Certain ERISA/Fiduciary Rule language (added in 2017) has been removed based on the Department of Labor’s Fiduciary Rule being vacated.

Links to the new documents are here and blacklines against the earlier versions are available here.

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