New FBF Documentation for Securities Lending Transactions Introduces Key Enhancements

In June 2026, the FBF published new French law-governed standard documentation for securities lending transactions. It updates the 2007 version of the FBF master agreement to reflect legal and regulatory changes and introduces substantial amendments to align with international standards such as the Global Master Securities Lending Agreement ("GMSLA"). This update follows the September 2025 publication of the new FBF master agreement for repurchase transactions, with both agreements sharing common features as part of the FBF's broader effort to modernise its standard documentation suite.

Key enhancements include:

• Mini close-out: A new optional Change of Circumstances event is created where a party fails to deliver or return loaned securities on the scheduled date. Inspired by the GMSLA approach, this mechanism may result in the termination of the affected loan only, rather than triggering a termination of all outstanding transactions ("Event of Default") if parties do not opt for this provision to apply. The parties may also elect in the schedule to include within the scope of this "mini close-out" securities transferred as collateral.

• Valuation for margining purposes: The definition of "Value of the Securities" is no longer limited to the regulated market and now refers to the principal trading venue; it also permits the parties to use a generally recognised source agreed between them where prices are unavailable.

• Default value of securities: The valuation methodology in case of an early termination of the transactions is substantially revised and offers greater flexibility in line with the GMSLA. Valuation is no longer limited to the latest quotation available on the regulated market and may notably take into account the price obtained in order to sell or buy, as appropriate, all or part of the relevant securities, the latest quotation on the relevant trading venue, and/or offer or bid quotations. The default value may also take into account the "fair value" as determined by the calculating party if such party, acting in good faith, has been unable to sell or buy, as appropriate, the securities or to obtain quotations or if such party acting in good faith determined that it would be commercially impossible or unreasonable to buy or sell the securities, as appropriate, or to rely on such quotations.

• Hedging costs: Upon early termination following an Event of Default or a Change of Circumstances, the calculating party may include hedging costs or gains in the settlement amount.

• Additional features: The 2026 version of the FBF master agreement incorporates specific provisions to comply with SFTR. It permits "open transactions", provides for multiple transactions payment netting, accepts notifications by email and confers exclusive jurisdiction on the Tribunal des affaires économiques of Paris and the Paris Court of Appeal.

• The agreement is currently available in French only.

In the post-Brexit context, this long-awaited French law-governed master agreement provides the French securities lending market with up-to-date and reliable documentation. Considering the substantial changes introduced in this new version, market participants should assess whether to migrate their existing transactions to this new contractual framework.

Jones Day advised the French Banking Federation in drafting this new documentation.

For further information, please consult the FBF master agreement for securities lending transactions, as well as our guidance note.