Repo and Stock Lending
A Practitioner's Guide
The content gives an overview of the respective markets and examines products ranging from vanilla bilateral transactions to agency, tri-party, cleared and structured transactions. It also includes specialist chapters on legal and regulatory issues, documentation, regulatory capital, tax and accounting.
This practical title features contributions from leading industry participants as well as lawyers who practise in this diverse field. The content gives an overview of the respective markets and examines products ranging from vanilla bilateral transactions to agency, tri-party, cleared and structured transactions. It also includes specialist chapters on legal and regulatory issues, documentation, tax and accounting. Together, the contributors provide in one volume a comprehensive overview of all aspects of the repo and stock-lending markets.
Whatever your role and whether you are new to the markets or a seasoned practitioner, this commercially focused title will serve as an invaluable reference tool and provide you with holistic insight into the business and law of repo and stock lending.
Table of Contents
|Repo and securities lending: an overview||7|
|Lifecycle of transactions||23|
|Agent lending/agency repo||41|
|Tri-party repo and stock lending||49|
|Central counterparty model||53|
|Structured repo transactions||69|
|Structured securities lending transactions||81|
|Legal and regulatory issues||97|
|UK taxation of repo and stock lending transactions||199|
|About the authors||387|
Eric Bystrom has worked in the investment banking industry for the past nine years. He specialises in collateral management, liquidity and funding and securities services. He is currently a director at a major European investment bank, where he is developing a securities services business.
Eric holds a BSc in international management.
Head of repo marketing, ICBC Standard Bank
Iain Colquhoun is head of repo marketing at ICBC Standard Bank, the global markets entity within the ICBC group. He has worked in a variety of roles within the repo industry for the last 15 years. This includes experience working with a large securities lending operation, a globally focused European bank and a Japanese securities house. Currently he is responsible for developing the international client financing franchise at ICBC Standard Bank.
Senior associate, Fieldfisher
Marissa Dearden is a senior associate in the derivatives and structured finance group at Fieldfisher, specialising in over-the-counter derivatives, structured repo/securities lending and prime brokerage. She qualified into the team in 2009 and undertakes transactional and advisory work for a range of clients, including asset managers, prime brokers, securities dealers and custodians. Ms Dearden has spent time on secondment with a broker dealer and two US investment banks, supporting their securities financing and prime brokerage desks.
Principal consultant, Capco UK
Samit Desai is a principal consultant in the capital markets practice at Capco, based in London. He holds a degree in economics and business and has more than 10 years experience in financial services across a range of banking and consulting roles. Mr Desai participates in key industry forums and is a collateral management specialist. He has led global collateral teams in fixed-income financing, central clearing, over-the-counter derivatives and prime brokerage. Most recently, he managed a large regulatory project through to completion at a large Tier 1 investment bank.
Principal consultant, Capco UK
Ivelina Dimtscheva is a principal consultant in the capital markets practice at Capco UK. She has expertise in strategy definition, operational transformation and IT realisation. Ms Dimtscheva has delivered multiple complex regulatory, profitability and efficiency driven projects across both sell-side and market infrastructure providers. Ms Dimtscheva has broad capital markets experience, spanning post-trade derivatives and securities processing, regulatory compliance, central clearing and collateral management. She holds a master’s degree in business administration from the University of Mannheim, Germany.
Partner, Norton Rose Fulbright
Daniel Franks is a partner in Norton Rose Fulbright’s capital markets department in London. He has extensive experience of a broad range of capital markets transactions, with a particular focus on OTC derivatives, repos, securities lending, structured products and structured finance transactions and advising on collateral, set-off, netting and derivatives enforceability. Mr Franks has extensive experience advising in relation to a wide variety of complex secured financing transactions, including liquidity swaps, repos, securities lending and secured lending arrangements. He has a particular interest in advising on the enforceability and characterisation of derivatives, repos, stock lending and collateral arrangements against a range of counterparty types, including private individuals, partnerships, trustees, charities and statutory and charter corporations. He has also been involved in the drafting of industry standard documentation relating to collateral and is an active member of the International Swaps and Derivatives Association’s legal, collateral and documentation committees. Mr Franks was, at the time of authoring the chapters on structured transactions, partner at Fieldfisher.
Edward Miller has been a partner in the Fieldfisher derivatives and structured finance team since 2003. His practice encompasses over-the-counter and exchange-traded derivatives (over all types of underlying), repos and stock lending, with a particular focus on collateral issues – including triparty structures – and structured repo and stock lending. His clients include global banks, regional banks, institutional asset managers and brokerdealers. Mr Miller regularly speaks on derivatives, repos and stock lending across Europe.
Nicholas Noble is a partner at Fieldfisher based in London, specialising in the taxation of financial transactions and funds.
He has advised investment banks regarding repos and stock lending transactions over many years. He was a member of the International Swaps and Derivatives Association Tax Sub-committee, which agreed the Credit Support Annex. He also advises various institutional stock lenders regarding the tax effects of stock lending. He has dealt with Her Majesty’s Revenue and Customs frequently regarding the tax effects of repos and stock lending transactions.
Jamie Pullen is an associate in the derivatives and structured finance group at Fieldfisher. He focuses on advising on documentation and regulatory issues relating to OTC derivatives, repos and stock lending, together with prime brokerage, custody and tri-party arrangements. His client base comprises predominantly sell-side institutions. Mr Pullen has spent more than 12 months on secondment at the London offices of two major US banking groups.
Senior associate, Fieldfisher
Sarah Reid qualified into the derivatives and structured finance group at Fieldfisher in 2008. She undertakes a variety of work, for both banks and buy-side clients, including advising on and negotiating derivatives master agreements, credit support arrangements, master confirmation agreements and long-form trade confirmations, prime brokerage agreements, repo and stock lending documentation and tri-party collateral arrangements. Ms Reid has spent time on secondment at the London offices of three US broker dealers.
Senior associate, Fieldfisher
Emma Spiers is a senior associate at Fieldfisher and qualified into the firm’s derivatives and structured finance group in 2006. Her practice covers derivatives and structured products, including credit, equity and funds, as well as securities financing. Ms Spiers advises a wide range of clients on derivatives and collateral documentation, repo and stock lending documentation, over-the-counter and futures clearing, synthetic prime brokerage and currency overlay arrangements. She has a particular focus on investment managers and has a comprehensive knowledge of the derivatives issues facing Undertakings for Collective Investment in Transferable Securities. She also has experience in a range of structured finance transactions, including synthetic securitisations and putting derivatives into structured finance transactions.
Partner, Deloitte LLP
Andrew Spooner is the lead International Financial Reporting Standards (IFRS) financial instruments partner globally at Deloitte. He is also a partner in Deloitte UK’s national accounting and auditing group.
Mr Spooner is the Deloitte’s lead specialist in financial instruments accounting and advises financial institutions and corporations on accounting for financial instruments and structured transactions. He is the lead liaison with the International Accounting Standards Board and other key regulators, such as the UK Prudential Regulatory Authority on interpretative issues of IFRS for financial instruments.
Mr Spooner is a member of the Technical Expert Group of the European Financial Reporting Advisory Group; a member of the consultative group of the Corporate Reporting Standing Committee of the European Securities and Markets Authority; and a member of the Financial Reporting Faculty Board of the Institute of Chartered Accountants in England and Wales. Mr Spooner is author of the two volumes of Deloitte’s iGAAP Financial Instruments series, now
in its tenth edition.
Partner and head of derivatives and structured
Guy Usher is a partner and head of the derivatives and structured finance group at Fieldfisher based in London. He joined the firm over 25 years ago and has practised in derivatives, repo and stock lending since then.
He advises banks, brokers, asset managers and agent lenders on flow and structured repo and securities lending transactions in both developed and emerging markets. He has advised on assetbacked securities and loan repo, liquidity swaps, cashless repos and stock loans, committed and term facilities, repo to maturity, extinguishable and credit contingent transactions. These transactions may alternatively be documented as total return swaps or forwards.
As well as advising on transactions, Mr Usher provides project advice on setting up new trading and collateral transformation operations and infrastructure, outsourcing, netting issues and bespoke collateral structures.
He has also advised on some major and high profile close-outs and has deep understanding of the intricacies of the standard documentation on close-outs and corporate actions.
Securities services and collateral management expert
Swen Werner began his career with Deutsche Bank in 1999, working for the capital markets policy unit at the bank’s head office in Frankfurt. Between 2005 and 2006 he worked for Deutsche Börse as a member of its market policy division (now part of group strategy). He re-joined Deutsche Bank’s global transaction banking division in 2006, heading up market advocacy and business strategy for its direct securities services unit.
Between 2011 and 2015 Mr Werner headed up the regulatory change and strategy function, as well as the product management function for Asia-Pacific for JP Morgan’s collateral management division. Mr Werner currently provides consulting services to financial organisations in securities services and collateral management. Mr Werner has an (executive) MBA from Cass Business School, London.