Regulatory Alerts2020-07-30
Added · Updated
FMA Circular on Securities Lending Transactions in the Cover Pool of Insurance Undertakings
The Austrian Financial Market Authority (FMA) issues this circular to guide supervised insurance undertakings on the regulatory treatment of securities lending transactions involving assets in their statutory cover pool (Deckungsstock). The guidance mandates that such transactions adhere to a prudent level based on aggregated quantitative and qualitative criteria, requires lent assets to be removed from or valued at zero in the cover pool upon transfer of disposal control, and permits the allocation of secured claims or collateral instead. It further stipulates that collateral must be highly liquid, maintain a minimum credit quality step of three, remain segregated from the borrower, and trigger mandatory written trustee approval for any disposal unless covered by a general approval with equivalent value reallocation.