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International Securities Lending Association

SFTR Corporate Actions Working Group #5

James Langlois, Lewis Nicholson

18 Sep 2019

SFTR Corporate Actions Meetings Q2 & Q3 2019

Date Name Agenda 23/04/2019 #1 Corporate Actions WG General discussion and identification of SFTR CA issues 23/05/2019 #2 Corporate Actions WG Determine Corporate Actions Universe (closed session) 05/06/2019 #3 Corporate Actions WG Agree Corporate Actions Clusters and Booking Activities 27/06/2019 #4 Corporate Actions WG Finalise Corporate Actions Clusters and Booking Activities 09/07/2019 #18 SteerCo. SFTR CA Update 11/07/19 #5 Corporate Actions WG Determine Best practice for CA Clusters: Full & Partial Returns 22/07/19 Corporate Actions Discussion Raise general issues related to settling the effects up CA clusters 31/07/19 #6 Corporate Actions WG Determine Best practice for CA Clusters: TBD

SFTR Corporate Actions: Overall Scope and Plan

1- Define Corporate Actions Universe (Q2 2019)

• Form a distinct list of all CAs
• Align with the ISO 15022 (SWIFT) and 20022 (STP) standards
• Determine attributes and effects of each CA on SFTs

2- Stratify the CAs into Clusters by their effects on SFTs & booking models (Q2

2019)

• Review groups of CAs which can be processed similarly
• Confirm CAs which have no material effect on SFTs
• Confirm booking models for clusters
• Define the SFTR reports that each Cluster of CAs affects

3- Agree an SFTR related Best Practice for each CA Cluster (Q3 2019)

• Reach agreement on specific booking models which enable SFTR compliant reporting
• Determine universal procedures (Best Practice) for processing and communicating CAs on SFTs

4- Connect the SFTR CA WG’s output with the wider industry discussion (Q4 2019)

• Contribute to the Securities Lending industry’s general policy (beyond of SFTR)

SFTR Corporate Actions: Working Group #3/4

Stratify the CAs into Clusters by their effects on SFTs & booking models

• Review groups of CAs which can be processed similarly
• Review CA Clusters as proposed in SFTR CA WG #2
• Discuss impact of CA types in the CA Cluster to the SFT
• Conducted a survey Questionnaire with 13 firm’s responses
• Agreed CAs which have no material effect on SFTs (39)
• Information Only/ Non-Economic CAs (27)
• Cash/ Economics outside of the SFT (11)
• Agreed CAs which cause direct downstream effects on SFTR

reports and must therefore be aligned by best practice:

Cluster # of CAs Full or Partial Return 8 Full Return 5 Addition Sec on Loan 12 Return and New Trade 13 38

SFTR Corporate Actions: Approach for this Working Group

1- Progress Update 2- Examination of the CA Cluster Full & Partial Returns 3- Discuss and agree Best Practice booking methodologies for this CA Cluster 4- Open Discussion (time allowing) 5- Agree Next Steps

Full or Partial Returns Corporate Actions

LENDER BORROWER Collateral Securities Full or partial return on a security which is lent against collateral. Corporate Action Effect Full or partial return on a security which is the Collateral, against a loaned security. LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Some form of bilateral return Some form of bilateral exchange

Full or Partial Returns Corporate Actions

Affects on the SFTR reports:

• 1. Standard SFT conventions as dictated by the Global Master Securities Lending Agreement are followed for

all of the activities relating to the processing of these Corporate Actions

• 2. All Full or Partial Returns Cluster Corporate Actions require either:
• Full closing out of an SFT to be reported via an ETRM (Termination / Early Term)
• Partial close out of an SFT to be reported via a MODI (Modification)
• 3. None of the Full or Partial Returns Cluster CAs will necessitate a new SFT booking.
• There will be no SFTR issues related to new trades i.e. fractional ratios, UTI generation, etc.
• 4. Some of these CAs will require an exchange (or reduction) of the Collateral if the collateral security is the

subject of the Corporate Action. These will be reported via the daily COLU (Collateral Update) report

Full or Partial Returns Corporate Actions

Mandatory Reorganisations - Cluster

ISO Code ISO Name ISO Description

Mandatory event - MAND Mand event w/ options - CHOS Voluntary event - VOLU Information - INFO Distribution - DISN Reorg - REORG General - GENL

Cash Move (Y/N) SFT Booking (Y/N) Scope Justification/ CA Cluster EQ FI DFLT Bond Default

Failure by the company to perform obligations defined as default events under the bond agreement and that have not been remedied.

MAND REORG N Y Full Return N Y MCAL Full Call

Redemption of an entire issue outstanding of securities, eg, bonds, preferred equity, funds, by the issuer or its agent, for example, asset manager,before final maturity.

MAND REORG Y Y Full Return Y Y REDM Final Maturity

Final maturity of a security. The redemption of an entire issue outstanding of securities, for example, bonds, preferred equity, funds, by the issuer or its agent, for example, asset manager, at final maturity.

MAND REORG Y Y Full Return Y Y WRTH Worthless

Booking out of valueless securities.

MAND REORG N Y Full Return Y Y PRED Partial Redemption With Pool Factor Reduction

Securities are redeemed in part before their scheduled final maturity date without reduction of the nominal value of the securities. This is commonly done by pool factor reduction.

MAND REORG N Y Partial Return Y Y DRAW Drawing

Securities are redeemed in part before the scheduled final maturity date. It is done without any pool factor reduction. The redemption is reflected in a debit of the face amount (FAMT). Drawing is

MAND REORG Y Y Full or Partial Return Y Y PCAL Partial Redemption Without Pool Factor Reduction

Securities are redeemed in part before their scheduled final maturity date with reduction of the nominal value of the securities. The outstanding amount of securities will be reduced proportionally. It is done without any pool factor

• reduction. The redemption is reflected in a debit of the face amount (FAMT).

MAND REORG Y Y Full or Partial Return Y Y PDEF Prefunding

Also called partial defeasance. Issuer has money set aside to redeem a portion of an issue and the indenture states that the securities could be called earlier than the stated maturity.

MAND REORG Y Y Full or Partial Return Y Y TEND Tender

Offer made to holders by a third party, requesting them to sell (tender) or exchange their securities. When a tender reaches the squeeze out stage, it will be mandatory.

MAND REORG Y Y Full or Partial Return Y Y TEND2 Takeover for shares Offer made to holders by a third party, requesting them to sell (tender) or exchange

their securities. When a tender reaches the squeeze out stage, it will be mandatory.

MAND REORG Y Y Full or Partial Return Y Y

Full or Partial Returns Corporate Actions

Voluntary Reorganisations - Cluster

ISO Code ISO Name ISO Description

Mandatory event - MAND Mand event w/ options - CHOS Voluntary event - VOLU Information - INFO Distribution - DISN Reorg - REORG General - GENL

Cash Move (Y/N) SFT Booking (Y/N) Scope Justification/ CA Cluster EQ FI ODLT Odd Lot Sale Purchase by Issuer

Sale or purchase of odd-lots to/from the issuing company, initiated either by the holder of the security or through an offer made by the issuer. Initiated by Issuer

VOLU REORG Y Y Full Return Y Y BIDS Repurchase Offer

Repurchase offer/Issuer Bid/Reverse Rights. Offer to existing holders by the issuing company to repurchase its own securities. The objective of the offer is to reduce the number of outstanding securities.

VOLU REORG N Y Full or Partial Return Y Y BPUT Buy Back

Early redemption of a security at the election of the holder subject to the terms and condition of the issue with no reduction in nominal value.

VOLU REORG Y Y Full or Partial Return Y Y DTCH Dutch Auction

An action by a party wishing to acquire a security. Holders of the security are invited to make an offer to sell, within a specific price range. The acquiring party will buy from the holder with lowest offer.

VOLU REORG Y Y Full or Partial Return Y Y

DFLT - Bond Default

Failure by the company to perform obligations defined as default events under the bond agreement and that have not been remedied. Default of a bond which is the borrowed security, lent against collateral.

• 1. “Default” status of the bond may trigger the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Return of Security Return of Collateral

DFLT - Bond Default

Failure by the company to perform obligations defined as default events under the bond agreement and that have not been remedied. Default of a bond which is the Collateral, against a loaned security.

• 1. “Default” status of the bond triggers the requirement to replace the collateral.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Return of Collateral New Collateral

DFLT - Bond Default

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

DFLT Bond Default N Y Full Return 1 Pay Date Pay Date Pay Date Pay Date N/A DFLT Bond Default N Y Full Return 2 N/A pay pay pay 2 DFLT Bond Default N Y Full Return 3 N/A pay pay pay 2 DFLT Bond Default N Y Full Return 4

• 2

DFLT Bond Default N Y Full Return 5 Pay Pay Pay Pay N/A DFLT Bond Default N Y Full Return 6

• N/A

DFLT Bond Default N Y Full Return 7 PAY PAY PAY PAY N/A DFLT Bond Default N Y Full Return 8

Debit date announced by market Debit date announced by market Debit date announced by market Debit date announced by market

N/A DFLT Bond Default N Y Full Return 9 Other Other Other Other N/A DFLT Bond Default N Y Full Return 10

• N/A

N/A N/A DFLT Bond Default N Y Full Return 11 EX Date Pay Date EX Date Pay Date

• DFLT

Bond Default N Y Full Return 12 Value Date Value Date

• N/A

DFLT Bond Default N Y Full Return 13

• 2

MCAL - Full Call

Redemption of an entire issue outstanding of securities, e.g. bonds, preferred equity, funds, by the issuer or its agent, for example, asset manager, before final maturity (a.k.a. Redemption, Mandatory Put.) Full call of an asset which is the borrowed security, lent against collateral.

• 1. A full call triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

MCAL - Full Call

Redemption of an entire issue outstanding of securities, e.g. bonds, preferred equity, funds, by the issuer or its agent, for example, asset manager, before final maturity (a.k.a. Redemption, Mandatory Put.) Full call on a security which is the Collateral, against a loaned security.

• 1. “Full Call” status of the security triggers the requirement to replace the collateral.
• 2. Collateral is returned and exchanged for a new security.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

MCAL - Full Call

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

MCAL Full Call Y Y Full Return 1

Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received

N/A MCAL Full Call Y Y Full Return 2 N/A pay pay pay 2 MCAL Full Call Y Y Full Return 3 N/A pay pay pay 2 MCAL Full Call Y Y Full Return 4

• 2

MCAL Full Call Y Y Full Return 5 Pay Pay Pay Pay N/A MCAL Full Call Y Y Full Return 6

• N/A

MCAL Full Call Y Y Full Return 7 PAY PAY PAY PAY N/A MCAL Full Call Y Y Full Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker If collateral same currency as proceeds, payment date. If collateral other currency than proceeds, upon receipt of proceeds from broker If collateral same currency as proceeds, payment date. If collateral other currency than proceeds, upon receipt of proceeds from broker

N/A MCAL Full Call Y Y Full Return 9 N/A N/A N/A N/A N/A MCAL Full Call Y Y Full Return 10 Other: Date we receive cash Other: Date we receive cash N/A N/A 2 MCAL Full Call Y Y Full Return 11 EX Date Pay Date EX Date Pay Date

• MCAL

Full Call Y Y Full Return 12 Value Date Value Date

• N/A

MCAL Full Call Y Y Full Return 13

• 2

REDM - Final Maturity

Final maturity of a security. The redemption of an entire issue outstanding of securities, for example, bonds, preferred equity, funds, by the issuer or its agent, for example, asset manager, at final maturity; a.k.a. Redemption rights. The Final Maturity of an asset which is the borrowed security, lent against collateral.

• 1. A Final Maturity triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

REDM - Final Maturity

Redemption of an entire issue outstanding of securities, e.g. bonds, preferred equity, funds, by the issuer or its agent, for example, asset manager, before final maturity (a.k.a. Redemption, Mandatory Put.) Final Maturity on a security which is the Collateral, against a loaned security.

• 1. “Final Maturity” status of the bond triggers the requirement to replace the collateral.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

REDM - Final Maturity

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

REDM Final Maturity Y Y Full Return 1

Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received

N/A REDM Final Maturity Y Y Full Return 2 N/A pay pay pay 2 REDM Final Maturity Y Y Full Return 3 N/A pay pay pay 2 REDM Final Maturity Y Y Full Return 4

• 2

REDM Final Maturity Y Y Full Return 5 Pay Pay Pay Pay N/A REDM Final Maturity Y Y Full Return 6

• N/A

REDM Final Maturity Y Y Full Return 7 PAY PAY PAY PAY N/A REDM Final Maturity Y Y Full Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker If collateral same currency as proceeds, payment date. If collateral other currency than proceeds, upon receipt of proceeds from broker If collateral same currency as proceeds, payment date. If collateral other currency than proceeds, upon receipt of proceeds from broker

N/A REDM Final Maturity Y Y Full Return 9

Maturity minus 11 BD Latest Maturity minus 5 BD Maturity minus 11 BD Latest Maturity minus 5 BD

N/A REDM Final Maturity Y Y Full Return 10

Other: Date we receive cash Other: Date we receive cash

N/A N/A 2 REDM Final Maturity Y Y Full Return 11 EX Date Pay Date EX Date Pay Date

• REDM

Final Maturity Y Y Full Return 12 Value Date Value Date

• N/A

REDM Final Maturity Y Y Full Return 13

• 2

WRTH - Worthless

Booking out of valueless securities. A Worthless asset which is the borrowed security, lent against collateral.

• 1. “Worthless” status of the bond triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

WRTH - Worthless

Booking out of valueless securities. Final Maturity on a security which is the Collateral, against a loaned security.

• 1. “Worthless” status of the bond triggers the requirement to replace the collateral.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

WRTH - Worthless

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

WRTH Worthless N Y Full Return 1 Pay Date Pay Date Pay Date Pay Date N/A WRTH Worthless N Y Full Return 2 N/A pay pay pay 2 WRTH Worthless N Y Full Return 3 N/A pay pay pay 2 WRTH Worthless N Y Full Return 4

• 2

WRTH Worthless N Y Full Return 5 Pay Pay Pay Pay N/A WRTH Worthless N Y Full Return 6

• N/A

WRTH Worthless N Y Full Return 7 PAY PAY PAY PAY N/A WRTH Worthless N Y Full Return 8 N/A N/A N/A N/A N/A WRTH Worthless N Y Full Return 9 Record Date Record Date +1 Record Date Record Date +1 N/A WRTH Worthless N Y Full Return 10

• N/A

N/A N/A WRTH Worthless N Y Full Return 11 EX Date Pay Date EX Date Pay Date

• WRTH

Worthless N Y Full Return 12 Value Date Value Date

• N/A

WRTH Worthless N Y Full Return 13

• 2

PRED - Partial Redemption With Pool Factor Reduction

Securities are redeemed in part before their scheduled final maturity date without reduction of the nominal value of the securities. This is commonly done by pool factor reduction. A Partial Redemption asset which is the borrowed security, lent against collateral.

• 1. “Redemption” status of the bond triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

PRED - Partial Redemption With Pool Factor Reduction

Securities are redeemed in part before their scheduled final maturity date without reduction of the nominal value of the securities. This is commonly done by pool factor reduction. Partial Redemption on a security which is the Collateral, against a loaned security.

• 1. “Redemption” status of the bond triggers the requirement to replace the collateral.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

DRAW - Drawing

Securities are redeemed in part before the scheduled final maturity date. It is done without any pool factor

• reduction. The redemption is reflected in a debit of the face amount (FAMT).

A Drawn asset which is the borrowed security, lent against collateral.

• 1. “Drawing” status of the security triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

DRAW - Drawing

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down Securities are redeemed in part before the scheduled final maturity date. It is done without any pool factor reduction. The redemption is reflected in a debit of the face amount (FAMT). A Drawing asset on a security which is the Collateral, against a loaned security.

• 1. “Drawing” status of the security triggers the closure of the SFT.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

DRAW - Drawing

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

DRAW Drawing Y Y Full or Partial Return 1

Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received

N/A DRAW Drawing Y Y Full or Partial Return 2 N/A pay pay pay 2 DRAW Drawing Y Y Full or Partial Return 3 N/A pay pay pay 2 DRAW Drawing Y Y Full or Partial Return 4

• 2

DRAW Drawing Y Y Full or Partial Return 5 Pay Pay Pay Pay N/A DRAW Drawing Y Y Full or Partial Return 6

• N/A

DRAW Drawing Y Y Full or Partial Return 7 PAY PAY PAY PAY N/A DRAW Drawing Y Y Full or Partial Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker

2 DRAW Drawing Y Y Full or Partial Return 9 N/A N/A N/A N/A N/A DRAW Drawing Y Y Full or Partial Return 10

• N/A

N/A N/A DRAW Drawing Y Y Full or Partial Return 11 EX Date Pay Date EX Date Pay Date

• DRAW

Drawing Y Y Full or Partial Return 12 Value Date Value Date

• N/A

DRAW Drawing Y Y Full or Partial Return 13

• N/A

PCAL - Partial Redemption Without Pool Factor Reduction

Securities are redeemed in part before their scheduled final maturity date with reduction of the nominal value of the securities. The outstanding amount of securities will be reduced proportionally. It is done without any pool factor reduction. The redemption is reflected in a debit of the face amount (FAMT). A Partial Redemption asset which is the borrowed security, lent against collateral.

• 1. “Partial Redemption” status of the security triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

PCAL - Partial Redemption Without Pool Factor Reduction

Securities are redeemed in part before their scheduled final maturity date with reduction of the nominal value of the securities. The outstanding amount of securities will be reduced proportionally. It is done without any pool factor reduction. The redemption is reflected in a debit of the face amount (FAMT). A Partial Redemption asset on a security which is the Collateral, against a loaned security.

• 1. “Partial Redemption” status of the security triggers the closure of the SFT.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

PCAL - Partial Redemption Without Pool Factor Reduction

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 1

Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received

N/A PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 2 N/A pay pay pay 2 PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 3 N/A pay pay pay 2 PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 4

• N/A

PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 5 Pay Pay Pay Pay N/A PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 6

• N/A

PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 7 PAY PAY PAY PAY N/A PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker

2 PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 9 N/A N/A N/A N/A N/A PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 10 Other: Date we receive cash Other: Date we receive cash N/A N/A 2 PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 11 EX Date Pay Date EX Date Pay Date

• PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 12 Value Date Value Date

• N/A

PCAL

Partial Redemption Without Pool Factor Reduction

Y Y Full or Partial Return 13

• 2

PDEF - Prefunding

Also called partial defeasance. Issuer has money set aside to redeem a portion of an issue and the indenture states that the securities could be called earlier than the stated maturity. A Prefunded asset which is the borrowed security, lent against collateral.

• 1. “Prefunded” status of the security triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

PDEF - Prefunding

Also called partial defeasance. Issuer has money set aside to redeem a portion of an issue and the indenture states that the securities could be called earlier than the stated maturity. A Prefunded asset on a security which is the Collateral, against a loaned security.

• 1. “Prefunded” status of the security triggers the closure of the SFT.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

PDEF - Prefunding

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

PDEF Prefunding Y Y Full or Partial Return 1

Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received

N/A PDEF Prefunding Y Y Full or Partial Return 2 N/A pay pay pay 2 PDEF Prefunding Y Y Full or Partial Return 3 N/A pay pay pay 2 PDEF Prefunding Y Y Full or Partial Return 4

• N/A

PDEF Prefunding Y Y Full or Partial Return 5 Pay Pay Pay Pay N/A PDEF Prefunding Y Y Full or Partial Return 6

• N/A

PDEF Prefunding Y Y Full or Partial Return 7 PAY PAY PAY PAY N/A PDEF Prefunding Y Y Full or Partial Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker

2 PDEF Prefunding Y Y Full or Partial Return 9 N/A N/A N/A N/A N/A PDEF Prefunding Y Y Full or Partial Return 10

• N/A

N/A N/A PDEF Prefunding Y Y Full or Partial Return 11 EX Date Pay Date EX Date Pay Date

• PDEF

Prefunding Y Y Full or Partial Return 12 Value Date Value Date

• N/A

PDEF Prefunding Y Y Full or Partial Return 13

• N/A

TEND - Tender (Cash)

Offer made to holders by a third party, requesting them to sell (tender) or exchange their securities. When a tender reaches the squeeze out stage, it will be mandatory. A Tendered asset which is the borrowed security, lent against collateral.

• 1. “Tendered” status of the security triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

TEND - Tender (Cash)

Offer made to holders by a third party, requesting them to sell (tender) or exchange their securities. When a tender reaches the squeeze out stage, it will be mandatory. A Tendered asset on a security which is the Collateral, against a loaned security.

• 1. “Tendered” status of the security triggers the closure of the SFT.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

TEND - Tender (Cash)

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

TEND Tender Y Y Full or Partial Return 1

Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received

N/A TEND Tender Y Y Full or Partial Return 2 N/A pay pay pay 1 or 2 TEND Tender Y Y Full or Partial Return 3 N/A pay pay pay 1 or 2 TEND Tender Y Y Full or Partial Return 4

• N/A

TEND Tender Y Y Full or Partial Return 5 Pay Pay Pay Pay N/A TEND Tender Y Y Full or Partial Return 6

• N/A

TEND Tender Y Y Full or Partial Return 7 OTHER PAY OTHER PAY N/A TEND Tender Y Y Full or Partial Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker If partial, modification to existing booking

TEND Tender Y Y Full or Partial Return 9 Record Date Record Date +1 Record Date Record Date +1 2 TEND Tender Y Y Full or Partial Return 10

Other: Date we receive cash Other: Date we receive cash

N/A N/A 2 TEND Tender Y Y Full or Partial Return 11 EX Date Pay Date EX Date Pay Date

• TEND

Tender Y Y Full or Partial Return 12 Value Date Value Date

• N/A

TEND Tender Y Y Full or Partial Return 13

• 2

TEND2 - Tender (Takeover for cash and/or shares)

Offer made to holders by a third party, requesting them to sell (tender) or exchange their securities. When a tender reaches the squeeze out stage, it will be mandatory. A Tendered asset which is the borrowed security, lent against collateral.

• 1. “Tendered” status of the security triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

TEND2 - Tender (Takeover for cash and/or shares)

Offer made to holders by a third party, requesting them to sell (tender) or exchange their securities. When a tender reaches the squeeze out stage, it will be mandatory. A Tendered asset on a security which is the Collateral, against a loaned security.

• 1. “Tendered” status of the security triggers the closure of the SFT.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

TEND2 - Tender (Takeover for cash and/or shares)

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

TEND2 Takeover for shares Y Y Full or Partial Return 1

Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received

N/A TEND2 Takeover for shares Y Y Full or Partial Return 2 N/A pay pay pay 1 or 2 TEND2 Takeover for shares Y Y Full or Partial Return 3 N/A pay pay pay 1 or 2 TEND2 Takeover for shares Y Y Full or Partial Return 4

• BOTH

TEND2 Takeover for shares Y Y Full or Partial Return 5 Pay Pay Pay Pay N/A TEND2 Takeover for shares Y Y Full or Partial Return 6

• N/A

TEND2 Takeover for shares Y Y Full or Partial Return 7 OTHER PAY OTHER PAY N/A TEND2 Takeover for shares Y Y Full or Partial Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker If partial, modification to existing booking

TEND2 Takeover for shares Y Y Full or Partial Return 9 Record Date Record Date +1 Record Date Record Date +1 2 TEND2 Takeover for shares Y Y Full or Partial Return 10

Pay date - if the election is shares , Other: Date we receive cash - volunatry Pay date - if the election is shares , Other: Date we receive cash - volunatry

N/A N/A 1 & 2 TEND2 Takeover for shares Y Y Full or Partial Return 11 EX Date Pay Date EX Date Pay Date

• TEND2

Takeover for shares Y Y Full or Partial Return 12 Value Date Value Date

• N/A

TEND2 Takeover for shares Y Y Full or Partial Return 13

• Full return / Modification to the

existing booking

ODLT - Odd Lot Sale Purchase by Issuer

Sale or purchase of odd-lots to/from the issuing company, initiated either by the holder of the security or through an offer made by the issuer. Initiated by Issuer. An Odd Lot Sale Purchase which is the borrowed security, lent against collateral.

• 1. “Purchase” status of the security triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

ODLT - Odd Lot Sale Purchase by Issuer

Sale or purchase of odd-lots to/from the issuing company, initiated either by the holder of the security or through an offer made by the issuer. Initiated by Issuer. A Odd Lot Sale Purchase asset on a security which is the Collateral, against a loaned security.

• 1. “Purchase” status of the security triggers the closure of the SFT.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

ODLT - Odd Lot Sale Purchase by Issuer

ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 1 N/A N/A N/A N/A N/A ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 2 N/A pay pay pay 2 ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 3 N/A pay pay pay 2 ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 4 PD PD PD PD 2 ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 5 Pay Pay Pay Pay N/A ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 6

• N/A

ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 7 PAY PAY PAY PAY N/A ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker If partial, modification to existing booking

ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 9 N/A N/A N/A N/A N/A ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 10

• N/A

N/A N/A ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 11 Pay Date Pay Date Pay Date Pay Date

• ODLT

Odd Lot Sale Purchase by Issuer Y Y Full Return 12 Value Date Value Date

• N/A

ODLT Odd Lot Sale Purchase by Issuer Y Y Full Return 13

• N/A

BIDS - Repurchase Offer

Repurchase offer/Issuer Bid/Reverse Rights. Offer to existing holders by the issuing company to repurchase its

• wn securities. The objective of the offer is to reduce the number of outstanding securities.

A Repurchase Offer asset which is the borrowed security, lent against collateral.

• 1. “Repurchase Offer ” status of the security triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

BIDS - Repurchase Offer

Repurchase offer/Issuer Bid/Reverse Rights. Offer to existing holders by the issuing company to repurchase its

• wn securities. The objective of the offer is to reduce the number of outstanding securities.

A Repurchase Offer asset on a security which is the Collateral, against a loaned security.

• 1. “Repurchase Offer” status of the security triggers the closure of the SFT.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

BIDS - Repurchase Offer

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

BIDS Repurchase Offer N Y Full or Partial Return 1

Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received

N/A BIDS Repurchase Offer N Y Full or Partial Return 2

• pay

pay pay 2 BIDS Repurchase Offer N Y Full or Partial Return 3

• pay

pay pay 2 BIDS Repurchase Offer N Y Full or Partial Return 4

• 2

BIDS Repurchase Offer N Y Full or Partial Return 5 Pay Pay Pay Pay N/A BIDS Repurchase Offer N Y Full or Partial Return 6

• 2

BIDS Repurchase Offer N Y Full or Partial Return 7 PAY PAY PAY PAY 2 BIDS Repurchase Offer N Y Full or Partial Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker If partial, modification to existing booking

BIDS Repurchase Offer N Y Full or Partial Return 9 Market Deadline Pay Date Market Deadline Pay Date 1+2 BIDS Repurchase Offer N Y Full or Partial Return 10

Other: Date we receive cash Other: Date we receive cash

N/A N/A 1- NEW 2- Return BIDS Repurchase Offer N Y Full or Partial Return 11 Pay Date Pay Date Pay Date Pay Date

• BIDS

Repurchase Offer N Y Full or Partial Return 12 Value Date Value Date

• 1+2

BIDS Repurchase Offer N Y Full or Partial Return 13

• Full return / Modification to the

existing booking

BPUT - Buy Back

Early redemption of a security at the election of the holder subject to the terms and condition of the issue with no reduction in nominal value. A Buy Back asset which is the borrowed security, lent against collateral.

• 1. “Buy Back” status of the security triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

BPUT - Buy Back

Early redemption of a security at the election of the holder subject to the terms and condition of the issue with no reduction in nominal value. A Buy Back asset on a security which is the Collateral, against a loaned security.

• 1. “Buy Back ” status of the security triggers the closure of the SFT.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

BPUT - Buy Back

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

BPUT Buy Back Y Y Full or Partial Return 1

Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received

N/A BPUT Buy Back Y Y Full or Partial Return 2 N/A pay pay pay 2 BPUT Buy Back Y Y Full or Partial Return 3 N/A pay pay pay 2 BPUT Buy Back Y Y Full or Partial Return 4

• N/A

BPUT Buy Back Y Y Full or Partial Return 5 Pay Pay Pay Pay N/A BPUT Buy Back Y Y Full or Partial Return 6

• N/A

BPUT Buy Back Y Y Full or Partial Return 7 PAY PAY PAY PAY N/A BPUT Buy Back Y Y Full or Partial Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker If partial, modification to existing booking

BPUT Buy Back Y Y Full or Partial Return 9 Market Deadline Pay Date Market Deadline Pay Date 2 BPUT Buy Back Y Y Full or Partial Return 10

Other: Date we receive cash Other: Date we receive cash

N/A N/A 2 BPUT Buy Back Y Y Full or Partial Return 11 Pay Date Pay Date Pay Date Pay Date

• BPUT

Buy Back Y Y Full or Partial Return 12 Value Date Value Date

• N/A

BPUT Buy Back Y Y Full or Partial Return 13

• Full return / Modification to the

existing booking

DTCH - Dutch Auction

An action by a party wishing to acquire a security. Holders of the security are invited to make an offer to sell, within a specific price range. The acquiring party will buy from the holder with lowest offer. A Dutch Auction asset which is the borrowed security, lent against collateral.

• 1. “Dutch Auction” status of the security triggers the closure of the SFT.
• 2. Entire Security position and all Collateral is returned.
• 3. This is a business as usual (BAU) procedure, initiated by the lender.

LENDER BORROWER Collateral Securities Corporate Action Effect Cash Proceeds Securities Written Down

DTCH - Dutch Auction

An action by a party wishing to acquire a security. Holders of the security are invited to make an offer to sell, within a specific price range. The acquiring party will buy from the holder with lowest offer. A Partial Redemption asset on a security which is the Collateral, against a loaned security.

• 1. “Partial Redemption ” status of the security triggers the closure of the SFT.
• 2. Collateral is returned and exchanged for a new bond.
• 3. This is a business as usual (BAU) process, initiated by the borrower.

LENDER BORROWER Collateral Securities Collateral Corporate Action Effect Cash Proceeds New Collateral Securities Written Down

DTCH - Dutch Auction

ISO Code ISO Name Cash Movement (Y/N) SFT Booking (Y/N) Cluster Firm No. Non-Cash Collateral Trade Date (Ex/ Pay/ Other) Non-Cash Collateral Settlement Date (Ex/ Pay/ Other) Cash Collateral Trade Date (Ex/ Pay/ Other) Cash Collateral Settlement Date (Ex/ Pay/ Other)

New SFT booking: 1 - New separate trade in addition 2 - Modi to the existing booking 3 - Something else

DTCH Dutch Auction Y Y Full or Partial Return 1

Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received Pay Date for shares collateral when proceeds received

N/A DTCH Dutch Auction Y Y Full or Partial Return 2

• pay

pay pay 2 DTCH Dutch Auction Y Y Full or Partial Return 3

• pay

pay pay 2 DTCH Dutch Auction Y Y Full or Partial Return 4

• 2

DTCH Dutch Auction Y Y Full or Partial Return 5 Pay Pay Pay Pay N/A DTCH Dutch Auction Y Y Full or Partial Return 6

• 2

DTCH Dutch Auction Y Y Full or Partial Return 7 PAY PAY PAY PAY 2 DTCH Dutch Auction Y Y Full or Partial Return 8

upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker upon receipt of proceeds from broker

N/A DTCH Dutch Auction Y Y Full or Partial Return 9 Market Deadline Pay Date Market Deadline Pay Date 1+2 DTCH Dutch Auction Y Y Full or Partial Return 10 Pay date Pay date N/A N/A 1+2 DTCH Dutch Auction Y Y Full or Partial Return 11 Pay Date Pay Date Pay Date Pay Date

• DTCH

Dutch Auction Y Y Full or Partial Return 12 Value Date Value Date

• 1+2

DTCH Dutch Auction Y Y Full or Partial Return 13

• 2

Open Discussion Time

SFTR Corporate Actions: Next Steps

ISLA SFTR team to circulate Draft Minutes for Firm review on Friday 12th July Firms to respond by end Wed 17th July, with changes or additions, to: james.langlois@isla.co.uk OR sftr@isla.co.uk ISLA to hold closed door mini working groups to test above methodology before dissemination to wider firm Working Group.