Mandel, Katz & Brosnan LLP
2 Experts
1 Contributions by Mandel, Katz & Brosnan LLP
PRACTICE NOTES
The timeline below is illustrative—often highly ambitious—and draws together the steps usually followed in a standard secondary debt trade; in practice, it is rarely met in full. A failure to keep to this timetable does not constitute a contractual default. The approach for par debt and distressed debt is broadly the same, though the table flags certain specific differences. This timetable assumes the parties will use the Loan Market Association (LMA) secondary debt trading suite to document their transaction. For more on the paperwork used in secondary debt trades, see Practice Note: Overview of the key documentation in a typical secondary debt trade.
Timeline of a typical secondary debt trade
T = Trade date. All references to days are to business days.
Pre-trade date
To minimise delay between the trade date and the settlement date:
The buyer and seller determine their respective
Banking & Finance
6 Contributions by Mandel, Katz & Brosnan LLP Experts
PRACTICE NOTES
STOP PRESS:
The Loan Market Association (LMA) has issued refreshed editions of the standard terms and conditions for Par and Distressed Trade Transactions, the full and complete sets of Funded Participation and Risk Participation Agreements, and the Secondary Debt Trading Documentation User Guide; all of which take effect from 17 March 2026. The changes include the deletion of LIBOR references, updates to IBOR rate definitions and the Target2 definition, and revised ERISA representations that incorporate further exemptions from the prohibited transaction rules under ERISA and the US Internal Revenue Code. The revised documentation is accessible to LMA members only via the LMA’s Documentation Hub.
Is loan trading on the secondary market a regulated activity? The UK position
The use of information within the UK loan secondary debt market remains somewhat unclear. The UK regulatory framework oversees firms that deliver services to clients connected to
Banking & Finance
PRACTICE NOTES
STOP PRESS:
The Loan Market Association (LMA) has issued revised editions of the standard terms and conditions for Par and Distressed Trade Transactions, the complete suite of Funded Participation and Risk Participation Agreements, and the Secondary Debt Trading Documentation User Guide, effective from 17 March 2026. The changes include the removal of LIBOR references, updates to IBOR rate definitions and the Target2 definition, and refreshed ERISA representations incorporating additional exemptions from the prohibited transaction rules under ERISA and the US Internal Revenue Code. The refreshed materials are available exclusively to LMA members via the LMA’s Documentation Hub. In the London market, secondary debt trades are commonly documented using the LMA’s recommended form documents. The LMA’s secondary debt trading suite was developed to standardise and simplify the sale of loan assets and to establish a consistent settlement process. The use of common
Banking & Finance
PRACTICE NOTES
STOP PRESS: The Loan Market Association (LMA) has released refreshed editions of the standard terms and conditions for Par and Distressed Trade Transactions, the complete set of Funded Participation and Risk Participation Agreements, and the Secondary Debt Trading Documentation User Guide, with all changes taking effect from 17 March 2026. The changes cover deletion and removal of LIBOR references, detailed amendments to IBOR rate definitions and to the Target2 definition, together with revised ERISA representations that incorporate further exemptions from the prohibited transaction rules under ERISA and the US Internal Revenue Code. The refreshed documents are accessible exclusively to LMA members via the LMA’s Documentation Hub. Sub-participation enables a lender to pass its exposure in a loan to another entity. Within the loan market, it functions as an alternative to assignment or novation. For information on loan transfers in a lending context, see
Banking & Finance
PRACTICE NOTES
STOP PRESS:
The Loan Market Association (LMA) has issued revised and updated editions of the standard terms and conditions for Par and Distressed Trade Transactions, the complete set of Funded Participation and Risk Participation Agreements, and the Secondary Debt Trading Documentation User Guide, effective from 17 March 2026. Changes comprise the elimination of LIBOR mentions, updates to IBOR rate definitions and to the Target2 definition, together with refreshed ERISA representations that incorporate further exemptions to the prohibited transaction rules under ERISA and the US Internal Revenue Code. These materials are available solely to LMA members via the LMA’s Documentation Hub. In London, secondary debt trades are generally recorded using recommended-form documents produced by the Loan Market Association (LMA), and this Practice Note proceeds on the basis that the parties to the secondary trade have agreed to use those forms for
Banking & Finance
CHECKLISTS
STOP PRESS
The Loan Market Association (LMA) has released refreshed editions of the standard terms and conditions for Par and Distressed Trade Transactions, the complete set of Funded Participation and Risk Participation Agreements, and the Secondary Debt Trading Documentation User Guide, with effect from 17 March 2026. The changes remove LIBOR references, update IBOR rate definitions and the Target2 definition, and revise ERISA representations to incorporate additional exemptions to the prohibited transaction rules under ERISA and the US Internal Revenue Code. The revised documentation is available exclusively to LMA members, accessible via the LMA’s Documentation Hub. These publications are updated versions issued by the LMA.
Summary
A core principle of trading under the LMA protocol is that ‘Trade is a Trade’; i.e. once a trade is struck—including an oral contract agreed by telephone—it is binding, and subsequent developments, even if adverse to one or both
Banking & Finance
CHECKLISTS
STOP PRESS:
The Loan Market Association (LMA) has issued refreshed versions of the standard terms and conditions for Par and Distressed Trade Transactions, the complete suite of Funded Participation and Risk Participation Agreements, and the Secondary Debt Trading Documentation User Guide, all coming into force on 17 March 2026. Changes comprise the deletion of LIBOR references, updates to IBOR rate definitions and the Target2 definition, plus revised ERISA representations that fold in further exemptions to the prohibited transaction rules under ERISA and the US Internal Revenue Code. The new materials are accessible solely to LMA members via the LMA’s Documentation Hub.
Summary
A core principle of trading under the LMA protocol is that ‘a Trade is a Trade’: once a trade is concluded (which may include an oral agreement reached by telephone), it is binding, and later events that may disadvantage one or both parties do not
Banking & Finance
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