S7C Securities Lending Agreements Training Programme©

  

This comprehensive intermediate to advanced level modular programme will instruct attendees on a wide range of financial, operational, risk, and legal issues affecting securities lending markets today. The training programme can be specifically tailored to meet a company's training needs by allowing companies to choose from a diverse range of 8 Modules covering European Union (EU) and United States (US) securities lending frameworks. A company can opt for a 1 day (4 Modules) or a 2 day (8 Modules) training programme. Attendees will be guided through the securities lending market framework, including market structure, counterparty risk, collateralisation issues, and the legal securities lending architecture. Attendees will also be trained in all the key Global Master Securities Lending Agreement (GMSLA) provisions and terminology, and will be able to put into practice knowledge gained in a practical securities lending workshop that can be designed to match the company's underlying objectives.  

Days 1 to 2

Module 1: An Overview of EU Securities Lending Markets

  • Best Practice: Bank of England SLRC – Stock Borrowing & Lending Code Guidance.
  • Update: European Securities Market Association (ESMA) Trends, risks and vulnerabilities in financial markets.
  • Market surveys: Insights from a range of securities lending market surveys.
  • Latest debate: A Review of Agent Compensation Incentives issues.

Module 2: An Overview of US Securities LendingMarkets

  • Best Practice: Federal Reserve Bank of New York – Reference Guide to US Repo and Securities Lending Markets.
  • Update: Identifying new business drivers and cash reinvestment strategies.
  • Market surveys: Insights from a range of securities lending market surveys.
  • Latest debate: Asset management and the Systemically Important Financial Institution (SIFI) designation.

Module 3: The Securities Lending Operating Framework: Market Structure and Conduct

  • Securities lending market structure, drivers, mechanics, and trading and pricing strategies.
  • Key players in the securities lending market: (1) lenders (asset managers, custodian banks, insurance companies, pension funds, sovereign wealth funds, third party lenders); (2) borrowers (broker dealers, investment banks, market makers); (3) agent intermediaries (asset managers, custodian banks, third-party agents); and (4) principal intermediaries (broker dealers, prime brokers, specialist intermediaries).
  • Securities lending underlying economic objectives, i.e. arbitrage (index, mergers, convertible bond), hedging, market making, settlement of trades, short selling, short equity, long equity.
  • Securities lending lifecycle (deal origination, settlement, collateralization, margin taking, billing, dividends, interest, corporate actions, returns).

Module 4: The Securities Lending Operating Framework: Legal Architecture INTERMEDIATE

  • Standardised and Non-Standardised Securities Lending Agreements.
  • An overview of the ISLA 2010 Global Master Securities Lending Agreement (GMSLA).
  • An Overview of GMSLA Legal Opinions (2000, and by country and counterparty type) and their substantive content (netting enforceability, general validity, re-characterisation risk for title transfer of securities).
  • GMSLA Addendums (2014 UK Tax, 2014 US Tax), Annexes (Agency), and Protocols (2009 Set-Off).        

Module 5: The Securities Lending Operating Framework: Legal Architecture ADVANCED

  • A review of 2012 GMSLA updates and close-out netting enforceability.
  • Analysing Key GMSLA documentation provisions (Loans of Securities, Delivery, Collateral, Distributions, Corporate Actions, Rates, Failure to Redeliver, Set-Off, Warranties, Events of Default, Specific Performance, Immunity Waiver).
  • Key Market Modifications to GMSLA documentation (Automatic Early Termination; Default Market Value, Failure to Deliver, Failure to Pay, Events of Default, valuation following Event of Default, Set-Off).
  • An Overview of the European Master Agreement (EMA), and old securities lending documentation (Overseas Securities Lending Agreements (OSLA), Master Equity & Fixed Interest Stock Lending Agreement (MEFISLA), and Master Gilt Edged Stock Lending Agreement (GESLA)). 

Module 6: Practical Securities Lending Workshop

  • A practical workshop on repo operational and documentation practices that can be specifically tailored to reflect the client's training needs, including topics such as: (1) securities lending key operational challenges; (2) a review of loan types; (3) eligibility rulesets and key eligibility features; (4) collateral haircut features; (5) cash collateral investment vehicles and strategies; (6) the UK insolvency law framework; and (7) the US bankruptcy framework.   

Module 7: Counterparty Risk and Collateral Issues affecting Securities Lending Transactions

  • Developing robust internal securities lending framework (collateral eligibility criteria, parameters, margin control, mark-to-market (MTM) mechanisms, and bi-lateral and tri-party arrangements).
  • Developing effective Counterparty Risk policies and ratings, and the advantages and disadvantages of collateral types.
  • Collateral pricing frequency and the 'rehypothecation' and 're-use' of collateral in securities lending transactions.
  • Securities lending, borrowing, and collateralization software and technologies offerings.

Module 8: Securities Lending Operational Practices

  • Evaluating organisational securities lending capacity (institutional credit risk appetite, investment strategy, diversification, portfolio size and tenor). 
  • Mitigating securities lending risks (borrower, collateral, cash collateral, intraday settlement, operational, legal).
  • Lending activity reporting, reviews and securities lending programme best practices.
  • Securities lending from segregated portfolios and pooled vehicles.

 

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