To the extent that legislation and investment policy permit, public bodies often include pension operations (rest) to invest short-term funds, mainly to finance liquidity needs. Deposits are contractual financial transactions in which an investor (for example. B public entity) buys securities from a bank or trader with a concomitant contractual agreement between the two parties to cancel the transaction at the same price (plus interest) at an agreed future date. Parties (government unit and bank/trader) are commonly referred to as counterparties. Rest is an integral part of a state and local investment programme and offers an alternative or complement to local investment pools, money funds and other money market instruments. However, as with all investments, the risks are related to rest, one of which is the counterparty`s credit risk. Such a risk can be mitigated by the use of good securitization practices. The group sales master contract for negotiated sales; The master agreements Among Underwriter (one for negotiated sales and the other for competitive sales); Conservation: In order to protect public funds, public authorities should ensure appropriate securitisation practices when using pension transactions for investments. Custody must be carried out by an independent custodian or by an external custodian. The custodian`s obligations (direct or tripartite parts) should be described in a written custody agreement. Master`s buyout contract. A master buy-back contract is the contractual contract entered into by a public body with a bank or counterparty.
A form of agreement, also known as a lump sum agreement, can be obtained on the website of the Securities Industry and Financial Markets Association (SIFMA), formerly known as The Bond Market Association (TBMA). However, public authorities can adapt the form of SIFMA`s master buyout contract to the specifics of their respective transactions. Safety: The underlying security of a pension contract is security. Guarantees for pension transactions are short-term and liquid. Typical guarantees are U.S. Treasury bonds (for example. B U.S. Treasuries) and Treasury Bonds (z.B. Farm Credit Banks, Home Loan Banks).
Public authorities should be aware of the risk factors of the underlying pension hedging instrument and refer to their investment policies to ascertain whether these guarantee instruments can be used for the buyback transaction. Securities purchased (assets) to guarantee the pension contract should retain a market value higher than that of the pension contract (margin, “haircut” or over-enitling). A master buy-back contract regulates the repurchase transaction. An agreement should reflect the following characteristics: although the public authorities are not bound by the Financial Accounting Standards Board (FASB), FASB`s Declaration No. 140 concerns counterparties to repurchase transactions with governments. FASB`s statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities,” generally provides that the purchaser of the pension (i.e. the public body) has the right to sell or replace the securities, the pension seller (i.e. the bank or trader) has no right to replace them or terminate the short-term contract. The buyer is required to register both securities as well as any obligation to return the securities.
2020年12月17日 5:18 PM 未分類