Search for: „Flex Buyout Contract“ in Oxford Reference “ Arrangement allows an issuer to repay and earn the redemption rate, but to terminate part of the contract when money is needed. Some agreements have more in common with a secured loan because they can take several years. 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). 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. A master buy-back contract regulates the repurchase transaction. An agreement should reflect the following characteristics: Master 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.