Mifid Ii Repurchase Agreements

Section 4, paragraph 1, paragraph 84, of the RRC also includes the definition of « simple pension transaction, » i.e. « a buyback of a single asset or a similar non-complex asset, as opposed to a basket of assets. » The AEMF`s transaction reporting guidelines, order management and synchronization under the MiFID II Directive of 10 October 2016 (AEMF/2016/1452) refer specifically to the practical example of two investment firms entering into a reseal transaction on a government bond when one of the investment firms notifies the transaction under the SFTR. According to this provision, the repurchase transaction means « any transaction governed by a pension contract or a reverse pension contract. » Repo refers to pension transactions in which the protection provider sells an asset or set of assets at price X with an agreement to repurchase the corresponding assets at a later date or on request in the case of a repozumt opened at price Y at price Y. The difference between the Y and the X price is usually annualized to a percentage called reposatz. For the purposes of reporting repurchase transactions, the AEMF proposes, with respect to counterparties, to use the terms « Collateral Giver » and « Collateral Taker. » As bis and CGFS Document 59 (p. 4, 5) states, « the repot is economically similar to a secured loan, since the securities offer credit protection when the seller (i.e. the cash borrower) is unable to complete the second part of the transaction. Collateral discounts and periodic margin payments continue to protect the lender from fluctuations in asset values. Repo operations offer great flexibility to counterparties. For example, the party receiving the guarantees can reuse them (z.B. can sell the securities directly, receive cash through another repository, use them for margins calls). In addition, repo transaction settlements generally result in shorter delays than for direct purchases of the same securities.

Finally, in most legal systems, buyback transactions are favoured by insolvency law, since they are exempt from automatic bankruptcy. This means that in the event of the cash borrower defaulting, counterparties have access to the securities and have the right to liquidate them. The regulation includes the definition of SFTs pensions (rest) and reverse pension transactions, securities or commodity lending and credit transactions, buy-backs and buy-backs, as well as loans and loans on margin. All of this can generally be described as a temporary exchange of cash or securities for security. For these, 155 fields must be reported, covering different transaction attributes, security details and participant identification. All reports must be notified to an EU-approved trade register; in addition to all previous requirements under EMIR and MiFID. The same is true when an investment firm acts under a discretionary mandate for a collective investment organization and enters into a pension contract for a government bond. Assuming that the Fund has reporting obligations under the SFTR and the investment firm does not do so, there is no obligation to report a transaction for the investment firm under MIFR, as the transaction was declared under the SFTR. 1. Repo-trading without centralized compensation is the simplest form of repo-trading.

These are two counterparties, the lender of securities, property or collateral law and the lender. Counterparties may use the services of a broker/agent to initiate negotiations with the counterparty. The broker/agent will not contract against the pension transaction if the broker/agent acts only on behalf of the opposing party and does not take the position in its own books.