COLL Part 7.6 Stock Lending and Repos—QFC Retail Schemes

Notes for pt 7.6

1 This part covers techniques relating to transferable securities and money-market instruments that are used for the purpose of efficient portfolio management. It permits the generation of additional income for the benefit of the QFC retail scheme (and its investors) by entry into stock lending arrangements and repo agreements for the scheme.
2 The particular method of stock lending permitted in this part is in fact not a transaction that is a loan in the normal sense. Rather it is an arrangement under which the lender transfers securities to the borrower otherwise than by way of sale and the borrower is to transfer the securities, or securities of the same type and amount, back to the lender at a later date. In accordance with good market practice, a separate transaction by way of transfer of assets is also involved in stock lending arrangements to provide collateral to cover the 'lender' against the risk that the future transfer back of the securities may not be satisfactorily completed.
Derived from QFCRA RM/2010-05 (as from 1st January 2011)