On December 2, the LSTA published Exposure Drafts of its new Shift Date Rules and its trading documentation. Under the existing shift date process, the LSTA polls dealers and posts on its website the dates such dealers think the market convention for trading debt shifted from a par documentation basis to a distressed documentation basis. Parties to a distressed trade for which a shift date is required can then choose to use that information and negotiate a shift date which can delay settlement times.
Instead of merely acting as a conduit for information, under the proposed Rules, the LSTA will determine and publish one shift date for debt which will be binding on all loan market participants. The new Rules also contemplate that, in the event the LSTA cannot determine the shift date after a review of trade data and other supporting information, the LSTA will appoint a three member Determinations Committee from amongst the members of the Board of Directors which will then make such determination. When the Shift Date Rules take effect on January 4, 2010, parties to a distressed trade for which step up provisions apply will be required to use the relevant shift date published by the LSTA. By selecting and publishing one binding shift date, the LSTA is confident that one of the obstacles causing settlement delays will be eliminated.
In addition, the timeline for terminating a trade and effecting a cover transaction under the Par Buy-in/Sell-out Mechanism set forth in the Par Confirm is being shortened by 5 days. Under the new timeline, the BISO Trigger Date will be T+15, and the Cure Period will be 5 business days.
The Exposure Drafts will be published in final form and will become effective on January 4, 2010.
In connection therewith, please find the following documents:
Exposure draft of the LSTA’s new Shift Date Rules. Click here for the clean version of the exposure draft and here for the blacklined version which shows the changes made to the draft sent to members of the Trade Practices and Forms Committee on November 9.
Exposure Draft of the Distressed Trade Confirmation STCs. Click here for the clean version of the exposure draft and here for the blacklined version which shows the proposed changes to Section 12 in the light of the new Shift Date Rules.
Exposure Draft of the Par Confirm STCs. Click here for the clean version of the exposure draft and here for the blacklined version which shows the proposed changes to the Par Confirm.