August 6, 2018 - Today the LSTA has released two new podcasts in its Documents Series; one deals with oral binding trades and the other explains “DQ Lists”. In the first podcast, LSTA’s EVP and Deputy General Counsel, Bridget Marsh, gives the background to the exemption from the Statute of Frauds and explains how the LSTA successfully lobbied New York state and had the law changed so that loan trades, like trades of other assets, could become legally binding contracts once the traders had agreed the material terms of the trade.
In the second podcast, Bridget explains how the LSTA’s DQ structure may not have reflected the practice of the market when drafted in 2014, but notes that the LSTA took the best elements of the structures being included in credit agreements at the time, after considering the interests of the borrower, the lenders, the agent and the liquidity of the market, itself, and created the LSTA DQ structure. Importantly, that structure permits the DQ list to be updated with the names of competitors selected by the borrower after the credit agreement’s effective date, applies to both assignments and participations, provides for the posting of the list so that traders can readily learn the names of those on the DQ list, and then sets out the borrower’s remedies in the event an open trade is settled with a borrower’s competitor. One of the drivers of the development of the LSTA DQ structure was also the desire to eliminate “pop-up questions” which are created by e-settlement platforms in response to Assignment Agreements which had been drafted with numerous square brackets requiring them to be tailored to suit the identity of each particular assignee.
Please continue to send your suggestions for future podcasts to Bridget Marsh.