LSTA issues standardized participation agreement for distressed trades

By Sara Rosenberg

New York, Oct. 24 - The LSTA issued a new standardized participation agreement for distressed trades, freeing buyers and sellers from having to negotiate and draft documentation from scratch each time they settled a trade as a participation, according to a news release.

A working group of the LSTA, which includes participants from the buy side and the sell side, collaborated on the documentation for more than 17 months.

The agreement is effective for trades entered into on or after Oct. 24.

"The market has wanted this document for a long time," said Bridget Marsh, senior vice president and assistant general counsel for the LSTA, in the release. "Using it will substantially increase efficiency and save buyers and sellers a considerable amount of time and effort."

The group is also tackling the issue of standardizing the terms under which unfunded obligations in distressed trades could be collateralized. This portion of the documentation should be finalized by the end of the year.

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