COLL 7.6.4 No Limits on Stock Lending and Repos—QFC Retail Schemes

(1) There is no limit on the value of the scheme property of a QFC retail scheme that may be the subject of stock lending arrangements or repo agreements under this part.
(2) However, the use of stock lending arrangements or repo agreements, or the reinvestment of cash collateral, must not—
(a) result in a change of the scheme's investment objectives, strategies and policy; or
(b) add substantial supplementary risks to the scheme's risk profile.
(3) Collateral in the form of cash may only be invested in 1 or more of the following:
(a) certificates of deposit;
(b) letters of credit;
(c) readily realisable investments;
(d) commercial paper with no embedded derivative component;
(e) units in an eligible money-market fund;
(f) deposits, but only if the deposits—
(i) are with an eligible bank; and
(ii) can be withdrawn within 5 business days or any shorter period required under the stock lending arrangement.

Note Readily realisable investment, eligible money-market fund, deposit and eligible bank are defined in the glossary.
(4) If a QFC retail scheme generates leverage through the reinvestment of collateral, this must be taken into account in calculating the scheme's global exposure.
Derived from QFCRA RM/2010-05 (as from 1st January 2011)