Appendix A: TECHNICAL PROPOSAL Read this document thoroughly before formulating a proposal. You are encouraged to be succinct and answer the questions as asked. Please be specific. Please note that the response to the RFP will be made part of the final legal custody agreement between SFERS and the custody provider. Kindly restate each question and provide the answers accordingly. MINIMUM QUALIFICATIONS Kindly if your organization is able to satisfy all of the qualifications and statutory requirements listed below and furnish appropriate documentation, accordingly. A Proposer can submit a response to this RFP for custody services only (Sections I and III, securities lending services only (Sections II and IV), or for both service mandates (Sections I, II, III, and IV). Custody At least $1 billion in total market capitalization as of September 30, 2015. At least $500 billion in total tax-exempt assets under trust/custody as of September 30, 2015. Minimum of 10 years’ experience in providing global trust/custody services for institutional tax-exempt investors. Minimum of 5 years’ experience in providing performance measurement (portfolio characteristics, universe comparison, and attribution) and advanced risk analytics (Value at Risk, Scenario and Stress Testing) for institutional investors as of September 30, 2015. The firm must carry Errors and Omissions Insurance coverage or must have applied for such coverage by the submission date of the RFP. E&O insurance will be required throughout the duration of the contract. Securities Lending At least $1 billion in total market capitalization as of September 30, 2015. Minimum of 10 years’ experience in providing securities lending services for institutional tax-exempt investors. At least $100 billion in securities lending lendable base for each of the last five years ending September 30, 2015. Will accept responsibility for securities lending program as a fully indemnified agent program specific to borrower default and operational negligence. The firm must carry Errors and Omissions Insurance coverage or must have applied for such coverage by the submission date of the RFP. E&O insurance will be required throughout the duration of the contract.
Plan Sponsor Type No. of Clients (Agent Relationship) Lendable Base (Agent Relationship) Public Corporates Endowment and Foundations Taft-Hartley, Union Mutual Funds, Investment Manager’s Commingled Funds Insurance Companies Others TOTAL the number of clients (all market segments) gained and/or lost for the periods listed in the following matrix. Report corresponding market values in US$ millions as of initiation date for clients gained and termination date for clients lost. Securities Lending Clients Only Clients Gained (Number) Clients Gained (US$ millions) Clients Lost (Number) Clients Lost (US$ millions) 2010 2011 2012 2013 2014 2015 (thru 9/30) I. Lending Volume What was the daily average dollar volume of securities loans outstanding for the last 12 months? Specify in US$ millions. For the 12 months ending September 30, 2015 Asset Classes Daily Avg. Lendable Base (US$ millions) Daily Avg. Out on Loan (US$ millions) Utilization Rate (%) Avg. Rebate Rate/Fees (bp) Average Demand Spread (bp) Average Reinvest Spread (bp) Avg. Daily Spreads Net of Rebate (bp) US Cap Equities
(Strictly intrinsic lending of 25 bps minimum with overnight cash in an Indemnified REPO Collateral (50% US Treasury, 25% US Agency, and 25% Equity S&P 500/Russell 1000) with 30 Day Absolute Term) Asset Class Lendable Assets (US$) Percent on Loan (using a 12 month rolling average) Assets on Loan (US$) Intrinsic Spread (bps) Rebate Rate in bps (using a 12 month rolling average) Re-invest Rate (bps) Avg. Spreads Net Rebate and Fees (bps) Gross Income (US$) SFERS Share of Revenue w/ Borrower Default Indemnification (Percent) Net Securities Lending Income (US$ millions) US Cap Eq US Mid & Cap Eq U.S. Corp Bonds High Yield Mortgages U.S. Govt Bonds TIPS Non-US Equities For example: $100 million loan outstanding for one year with a 0.20% net spread and a of 80/20 is equal to $160,000 ($100,000,000 x 0.002 x 0.80). CALCULATION WORKSHEET #3 Securities Lending Revenue Estimate Worksheet – #3 (Assume Cash Reinvestment Guidelines as specified in Appendix H) Asset Class Lendable Assets Percent on Loan (using Assets on Intrinsic Spread Rebate Rate in Re-invest Rate Avg. Spreads Gross Income SFERS Share of Revenue w/ Net SFERS Securities
(US$) a 12 month rolling average) Loan (US$) (bps) bps a 12 month rolling average) (bps) Net Rebate and Fees (bps) (US$) Borrower Default Indemnification (Percent) Lending Income (US$ millions) US Large Cap Eq US Mid & Small Cap Eq U.S. Corp Bonds High Yield Mortgages U.S. Govt Bonds TIPS Non-US Equities For example: $100 million loan outstanding for one year with a 0.20% net spread and a of 80/20 is equal to $160,000 ($100,000,000 x 0.002 x 0.80). CALCULATION WORKSHEET #4 Securities Lending Revenue Estimate Worksheet - #4 (Assume SEC Rule 2a-7 Reinvestment Guideline) Class Lendable Assets (US$) Percent on Loan (using a 12 month rolling average) Assets on Loan (US$) Intrinsic Spread (bps) Rebate Rate in bps (using a 12 month rolling Re-invest Rate (bps) Avg. Daily Spreads Net Rebate and Fees (bps) Income (US$) SFERS Share of Revenue w/ Borrower Default Indemnification (Percent) Net SFERS Securities Lending Income (US$ millions)