all rating changes for the past five (5) years. Please comment on the firm’s credit quality and overall financial strength. 3.4 How many accounts does your typical account administration/team manage? How do you determine the number of accounts assigned to each? How many accounts are assigned to the account administrator who would be assigned to OST’s account and what are the total assets under administration for this person? Please address both the master custody and securities lending service areas in your response. How do you propose to coordinate the delivery of service with staff located in different time zones and geographic locations? Where will OST’s service team be located? During what hours will client service teams be available? Describe how your client service team will respond to client inquiries, including first point of contact, inquiry routing/tracking, and resolution. 3.5 Provide the following information about insurance coverage relevant to the department handling master custody functions and/or securities lending. Include insurance coverage with respect to any acts or omissions of directors, officers and other personnel resulting in loss of funds. Please indicate the type and amount. Add additional lines if necessary. Type of Policy Policy Limit Policy Deductible Limit Per Claim Underwriters(s) Expiration Date 3.6 Over the past five (5) years, has your firm or any officer or principal been involved in any business litigation, legal proceedings, or regulatory actions or investigations? If so, provide a brief explanation and indicate the current status. 3.7 Describe your plan for providing this client with initial training and ongoing training for your online accounting and reporting systems and other tools. How often do you typically conduct training sessions with clients like OST? Describe what type of educational sessions, user conferences, publications or other means for keeping clients fully educated and for providing a forum for new ideas and needs you provide to clients. Describe your approach to client servicing and product familiarization. 3.8 Do you have a plan/arrangements in place for an alternative work site should your facilities become inoperative because of fire, earthquake, terrorist attacks, etc.? Briefly describe your emergency and disaster recovery plans. Please provide five (5) references that meet the following criteria:
How does your firm vary its mismatch between the maturities of loans and investments? Provide on a monthly basis for the three (3) year period ended 12/31/14 by asset class: Average daily balance of outstanding loans Average market value of total lendable securities Average percentage of loans outstanding to lendable securities Total income earned, after payment of rebates, but prior to split with clients Average gross spread provided to your clients Average duration mismatch between securities loans and the cash collateral pool. Approved Borrowers Borrower selection and review. Describe your process for approving borrowers and establishing credit limits. How and how often is credit worthiness reviewed? Describe the process and personnel devoted to this effort. Do you have special procedures when market volatility is high? How are maximum loan amounts set and monitored? How is a particular client’s exposure to any one borrower limited or monitored? Can the client establish a limit for loans to a give borrower? Which area of your firm is responsible for credit analysis and how does it interact with the securities lending division? How will your firm address the provisions of Title 62 § 90 (Appendix G) which require OST to pre-approve borrowers? With how many borrowers do you conduct business? How many are currently active? Please provide a list and identify those you consider your primary borrowers. Describe the process of determining the rebate rate to the borrower. Is this fixed for the life of the loan? Have you ever experienced a borrower default? If yes, provide details, such as your firm’s dollar exposure and how clients were impacted. If no, please provide examples, if applicable, of instances where your procedures helped avoid a borrower default or led you to cease doing business with a particular counter-party. Does your firm have compensation arrangements with borrowers beyond the normal form of negotiating rebates/fees that OST should know about? Has the firm ever dismissed or penalized a borrower within its program? Please describe. Indemnification At a minimum, the Securities Lending firm must indemnify OST for borrower default.
Assume the following approximate transaction levels per year: Security General Account State Agency Account Federal Farm Credit 1 Federal Home Loan Bank 11 Federal Home Loan Mortgage Corporation 17 Federal National Mortgage Association 24 Mortgage Backed Securities 15 Development Corporation for Israel 1 TOTAL 69 0 Secondary transactions for the current fiscal year, ending June 30, 2015 are below: Transaction General Account State Agency Account Maturity Proceeds 37 0 Mortgage Backed Security Paydowns 1,246 0 Interest Proceeds 1,538 14 Wire Transfers to OST’s Account (approx.) 106 14 Wire Transfers to Custodian for settlement 23 0