SECURITIES LENDING & REPO MARKETS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - OCTOBER 2010

GLOSSARY

United Kingdom government bonds

Gilts

A custodian that provides its customers with custody services in respect of securities traded and settled not only in the country in which the custodian is located but also in numerous other coun- tries throughout the world.

Global custodian

International market standard agreement for securities lending

Global Master Securities Lending Agreement (GMSLA)

International market standard agreement for repos.

Global Master Repurchase Agreement (GMRA)

> A percentage subtracted from the market value of a security to give its value when used as collateral. The haircut is intended to protect a lender of funds or securities from losses owing to declines in collateral values. > Initial margin on a repo transaction. A private investment fund, often leveraged, and often engaging in active trading strategies (including arbitrage). Hedge funds are typically subject to limited regulatory oversight. An arrangement under which securities (collateral) are not physi- cally delivered to the borrower (lender) but are simply segregated by the lender (borrower) in an internal customer account.

Haircut

Hedge fund

Hold in Custody

Also called hard stock. See Specials.

Hot stock

International Capital Market Association

ICMA

An agreement to compensate for damage or loss. Custodians sometimes offer it to lending customers in a variety of forms (see indemnity). The excess of the value of collateral over the purchase price on the purchase date of a repo. Initial margin is usually intended to protect the buyer against the illiquidity of collateral and the credit risk on the seller.

Indemnification

Initial margin

A form of guarantee or insurance, frequently offered by agents. Terms vary significantly and the value of the indemnity does also.

Indemnity

Agent or intermediary that is paid a commission to bring buyers and sellers together. The broker’s commission may be paid either by the initiator of the transaction or by both counterparts. In securities lending, a party that borrows a security in order to re-deliver it to a client, rather than borrowing it for its own-house needs.

Interdealer broker

Intermediary

page 64 | Securities Lending & Repo markets