Question ID: 196
Regulation Reference: Guidelines on submission of information to NCAs (Preparatory phase)
Article: 35
Template: S.10.01
Status: Final
Date of submission: 10 Nov 2015
Question
We are not quite sure what to report in S.10.01 and especially field A9 near leg amount, as our situation can be described as following:
We've got assets in our portfolio (on-balance) that are borrowed from one of our contract partners. These assets are not borrowed for security purposes, but to fulfill requirements in order to correspond with legal restraints. Therefore we are not sure, whether these assets should be reported in D1 (as "usual" assets in the portfolio) or in D5 as "lending" (but as explained no security lending)?. At the end of the contract with our business-partner, these assets will be delivered back to the contract partner, without any payments. The only cashflow in association with the contract are fees paid quarterly by our undertaking.
In relation to A9-Near leg amount our position would be the borrower in a lending (and again - no security lending), but what amount is expected here? The market value of the borrowed assets at inception?
EIOPA answer
From the information provided, it would appear that the assets are indeed subject to a securities lending agreement and therefore the transaction should be reported in the securities lending template with the indication in cell A9 (C0120) of “4 - Borrower in a securities lending” and the value in C0130 being the amount or market value of the securities received at the contract inception. However, the undertaking should examine the nature and substance of the transaction and determine where it should be reported; where appropriate, the undertaking should engage with their national competent authority.
In any case, please note that the securities should be reported in template S.06.02 as they are on the balance sheet.
Please also note that ‘security lending’ refers to “the lending of securities by one party to another, which requires that the borrower provides the lender with collateral”, irrespective of the reason why the securities are being lent or borrowed” (refer to the Log to template S.10.01 – Annex II of the ITS on reporting).