Regulatory Alerts1996-09-30
Securities Lending Guideline for Deposit-Taking Institutions
The Office of the Superintendent of Financial Institutions (OSFI) establishes these prudential requirements for securities lending by federally regulated banks, foreign bank branches, trust and loan companies, and cooperative credit associations. Financial institutions must hold collateral of at least 102 percent of the market value of lent securities, mark both loaned and collateral assets to market daily, and restrict eligible collateral to highly rated, readily marketable instruments. The guideline further mandates comprehensive internal controls, including approved borrower lists with defined limits, periodic senior management and auditor verification, legally binding master agreements, and structured administrative arrangements for external agents.