KADIKAR: Optimizing is creating a process that can improve efficiency and financial performance. For example, if you are a Margin specialist and you need to make a decision about the collateral you want to provide against a particular triparty trade or margin call, optimization could mean that you need to make sure that you assign the cheapest securities to deliver. Or you sit on a securities lending table and think about how to allocate credits or loans in order to minimize the capital that needs to be held against the counterparty`s accounts. Or you could be at a derivatives desk or futures and decide which exchange you want to send cleared trades to in order to reduce Margin requirements. Optimization will mean different things to different people. It is a question of having a framework that can take into account the different factors and costs that fuel this performance requirement. The different costs can be liquidity coverage ratio (LCR), jurisdiction, credit, etc. Being able to harmoniously integrate these costs is what optimization is all about. This is clearly not a “one size fits all”. Step 1 – QFCs. The QFC definition is very broad and covers all securities contracts, securities contracts, futures, repurchase agreements, swap agreements and all similar agreements that the FDIC defines as QFC by regulation, dissolution or injunction.
In return, the definition of “securities contract” is extended to include, among other things, any contract to buy, sell or lend a security, certificate of deposit or mortgage, or an option on any of the above options; any framework agreement providing for any of the above types of transactions; or a security agreement or agreement or any other credit quality improvement related to any of the above types of transactions. Thus, in addition to the more obvious types of contracts, such as ISDA framework contracts and swap operations, QFCs include, for example, underwriting contracts or credit agreements that guarantee hedges.  A “qualified financial contract” has the same meaning as in the Dodd-Frank Act and would include, among other things, derivatives, deposits, lending and securities lending transactions. B commodity and futures contracts19. However, if, according to the rules of the Federal Final Reserve and the OCC Final Rules20, a framework contract with a foreign GSIB allows transactions to be entered into in one or more U.S. branches or agencies of foreign GSIBs, the framework contract is subject only to these rules for QFCs reserved with a U.S. institution or a U.S. agency of the foreign GSIB (i.e. reserved in the case of a covered entity). While some contracts, such as swaps and repurchase agreements, clearly fall within the definition of a QFC, the term is broad enough to encompass many types of agreements that are not normally considered derivatives. Ancillary provisions in some agreements may have the effect of bringing them within the scope of the definition.
Multi-level framework contracts (which allow the booking of transactions by different branches of a company, some of which are covered companies and others not), investment management contracts, prime brokerage agreements, custody agreements, reservation agreements, correspondence agreements, collateralization agreements, deposit contracts, deposit contracts, trust agreements, trust agreements, etc. .