The buy-back contract, or “repo,” the market is an opaque but important part of the financial system, which has recently attracted increasing attention. On average, $2 trillion to $4 trillion in pension transactions are traded every day — guaranteed short-term loans. But how does the pension market work, and what about it? We are adopting, as proposed, an amendment to Rule 12 d3-1, which eliminates a reference attached to the rule. Rule 12d3-1 provides for a limited exemption from the prohibition under Section 12 (d) (3) of the Act against a fund, 26 As explained above, a fund that enters into a pension contract with a dealer or other counterparty engaged in securities-related activities may violate Section 12 (d) (3) of the Act. , unless it is permissible to verify the underlying security of the agreement. The reference to Rule 12d3-1 made the rule unavailable for pension transactions. The removal of this note allows funds to rely on Rule 12d3-1, even if the pension contract does not meet the requirements of Rule 5b-3.27. Banks and their lobbyists tend to characterize regulation as a bigger cause of problems than policy makers who put in place the new rules after the 2007-9 global financial crisis. The objective of the rules was to ensure that banks had sufficient capital and liquidity, which can be sold quickly in the event of difficulties. These rules may have allowed banks to keep reserves rather than lend them to the repo market in exchange for treasury bills.

9 When the Commission amended Rule 2a-7 in 1996, we subordinated the availability of “through” treatment to preferential treatment of pension transactions under the Bankruptcy Act and related insolvency statutes. See Reviews to Rules Regulating Money Market Funds, Investment Company Act Release No. 21837 (Mar. 21, 1996) [61 FR 13956 (March 28, 1996)]. The proposed Rule 5b-3 contained similar requirements. In addition, we have proposed amendments consistent with Rule 2a-7 to be consistent with Rule 5b-3. In general, the credit risk associated with pension transactions depends on many factors, including the terms of the transaction, the liquidity of the security, the specifics of the counterparties concerned and much more. repurchase the securities at a time or on demand at a price sufficient to return the initial purchase price to the fund, plus an additional amount representing the return on the fund`s investment. The cash paid on the initial sale of securities and the money paid at the time of the repurchase depend on the value and type of security associated with the pension. In the case of a loan. B, both values must take into account the own price and the value of the interest accrued on the loan.

v) In the event of insolvency with respect to the seller, the repurchase agreement would be taken into account under a provision of the applicable insolvency law, which provides for the exclusion of any automatic suspension of the rights of creditors vis-à-vis the seller. An entire loan bank is a form of pension in which the transaction is secured by a loan or other form of commitment (for example. B mortgages) and not by a guarantee. 4. The repaid guarantee refers to a debt security whose principal and interest payments must be paid by government bonds (“deposited securities”) that have been irrevocably transferred to a fiduciary account under an agreement between the issuer of the bond and a receiver who is not a “partner” pursuant to Section 2, point (a) 3) (C) of the Law (15 U.S.C.