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									                  LOS ANGELES COUNTY
            EMPLOYEES RETIREMENT ASSOCIATION




                          REQUEST FOR PROPOSAL

               CORPORATE BONDS PRINCIPAL-BASED
                 SECURITIES LENDING SERVICES




                                        Robert Z. Santos
                                 Investment Officer, Fixed Income



                         LACERA
                       Gateway Plaza
              300 North Lake Avenue, Suite 850
Pasadena, CA 91101TABLE OF CONTENTS


I.     INTRODUCTION ................................................................................................................................. 2
II.    INSTRUCTIONS FOR RESPONSES..................................................................................................... 3
III.   LISTING OF SECURITIES ................................................................................................................... 3
IV.    QUESTIONNAIRE............................................................................................................................... 4
A.     SUPPLIER PROFILE .......................................................................................................................... 4
B.     DIMENSIONS OF DIRECT BORROW PROGRAM ................................................................................ 7
C.     OPERATIONS .................................................................................................................................... 8
       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES

D.           SYSTEMS / CLIENT REPORTING ......................................................................................................10
E.           REINVESTMENT OF CASH COLLATERAL .........................................................................................11
F.           REVENUE GUARANTEE / FEES ........................................................................................................13
V.           EXHIBIT I..........................................................................................................................................14
   I. INTRODUCTION
GENERAL INFORMATION
The Los Angeles County Employees Retirement Association (LACERA) was
established under the provisions of the County Employees Retirement Law of
1937. The general management of LACERA is the responsibility of the Board of
Retirement. The Retirement Board and LACERA’s staff are responsible for daily
operations involving the administration of benefits, accounting functions, and
portfolio administration. The Board of Investments is responsible for establishing
investment policies and objectives for the employees’ retirement funds.

LACERA administers a pension fund with approximately $30.7 billion in total
assets as of December 31, 2008. These assets were invested as follows: 43% in
Domestic and International Equities, 32% in Fixed Income, 14% in Real Estate,
10% in Private Equity, and 1% in Commodities.


SERVICES TO BE PROVIDED
The purpose of this Request for Proposal (RFP) is to review the capabilities of
potential providers of principal-based securities lending services for LACERA’s
estimated $3.78 billion in corporate bonds available for loan.


NOTICE TO RESPONDENTS REGARDING THE PUBLIC RECORDS ACT
Responses to this RFP become the exclusive property of LACERA. At such time
as LACERA recommends candidate(s) to the Board of Investments, and such
recommendation appears on the agenda, all proposals submitted shall be
regarded as public record. Exceptions will be those elements in each RFP that
are defined by the respondent as business or trade secrets and are appropriately
marked as "TRADE SECRETS," "CONFIDENTIAL," OR "PROPRIETARY."

LACERA shall not be in any way liable or responsible for the disclosure of any
such records including, without limitations, those so marked if disclosure is
deemed to be required by law or by an order of the court. The respondent shall
indemnify LACERA for any and all attorney's fees awarded against LACERA
based on LACERA's refusal to disclose those elements of the RFP marked by
the respondent with a restrictive legend.
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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


 II. INSTRUCTIONS FOR RESPONSES
Please respond to each question in the RFP that pertains to the solution you are
proposing. FINAL RESPONSES ARE DUE NO LATER THAN FRIDAY, APRIL 3, 2009 AT
3:00 P.M. (PST).

In addition to your response to the questions in the RFP, please provide the
following:

                   A copy of your organization’s most recent Annual Report.
                   Organizational charts identifying key functional areas and relevant
                    personnel.

Please send five (5) hard copies of your response and one (1) copy using
Microsoft Word via email, and on a CD-R (recordable compact disc) to:

             MR. ROBERT Z. SANTOS
             INVESTMENT OFFICER, FIXED INCOME
             LACERA
             300 N. LAKE AVENUE, SUITE 850
             PASADENA, CA 91101-4199
             TEL: (626) 564-6000 EXT. 3315
             FAX: (626) 564-6130
             E-MAIL: MMASTERS@LACERA.COM

Please note that during this evaluation process LACERA staff will, respectfully,
not answer any questions related to the RFP. If a question appears unclear to
you, please state your interpretation of the question and answer it accordingly.
Additionally, respondents are requested not to contact LACERA personnel for
meetings, conferences or discussions related to this RFP.



III. LISTING OF SECURITIES

To obtain a list of LACERA’s corporate bonds, please send an email to Ms.
Michelle Masters at MMASTERS@LACERA.COM.




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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


IV. QUESTIONNAIRE
A. SUPPLIER PROFILE

      1. Provide background information on your firm, including ownership
         structure and affiliated companies.

      2. Provide an organizational chart of the firm as a whole, and for your
         securities lending, proprietary trading, and prime brokerage
         businesses. Is securities lending a separate business unit or is it an
         additional function of the trading desk?

      3. What was the value of your parent company’s shareholders’ equity as
         of 12/31/08?

      4. What are your current credit ratings (short-term and senior long-term
         debt) for Moody’s, S&P, and Fitch?

      5. What was the date of your organization’s last rating change? Please
         specify which rating firm made the change, if change was an upgrade
         or downgrade, and to/from what level.

      6. List your and your parent company’s total revenue. What percentage of
         your and your parent company’s total revenues did securities lending
         represent in 2007 and 2008? Break out revenues by asset class.

      7. List the types and amounts of insurance carried, name of carrier(s),
         and deductibles for calendar year 2008 policies.

      8. Who are the external auditors for your firm as a whole, and specifically
         for your securities lending and prime brokerage areas? (Please include
         location of primary office and partner responsible.) When was the last
         audit completed?

      9. List any material recommendations made by external auditors
         pertaining to systems or controls used by your securities lending area
         from the last three internal control audits. Provide copies of the audit
         report(s) including management’s response.

      10. Do you have an internal audit department?                                                If so, describe its
          responsibilities and reporting structure.



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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


      11. Provide a brief explanation and indicate the status of any business
          litigation or other proceedings related to your securities lending area
          during the past five years.

      12. Have you been involved in any corporate mergers or acquisitions
          during the past five years pertaining to securities lending, prime
          brokerage and asset management? If yes, provide details regarding
          the size and scope of the transactions and the effect on your
          competitive position in the securities lending business.

      13. Where is the headquarters of your securities lending department?
          Where do you have additional lending desks? What functions are
          performed from each of these sites?

      14. Who are the individuals in the following positions and how long have
          they been in these roles?

                   TITLE                                                                           NAME       TIME
  Head of Securities Lending Business
  Head of Securities Lending Operations
  Head of Collateral Reinvestment Group
  Head of Securities Lending Trading
  Proposed Relationship Manager for
  LACERA

      15. Provide the                 names of all investment professionals who have resigned,
          terminated,                 or transferred/rotated to another department, within the
          past three                  (3) years (lending and reinvestment). Provide a brief
          explanation                  for each departure. List any replacements for these
          vacancies.

      16. Provide an overview of your approach to service for LACERA.

      17. Do you operate more than one type of direct lending program? (e.g.,
          fixed fee or hybrid program). If yes, which options are available?
          Please be specific.

      18. List all clients for principal-based securities lending services gained
          since 12/31/2005. Include a description for each mandate including
          asset class(es), value of assets available for loan, and the date of
          program inception.




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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


      19. List any principal-based securities lending clients that have left your
          program since 12/31/2005. Include a description of each mandate
          and/or program type, including asset class(es), value of assets
          available for loan, reason for and date of termination.

      20. For which asset classes and/or security types do you feel your
          organization has the greatest competitive advantage? Please describe
          your advantages in the most specific terms possible for each asset
          class.

      21. What is your philosophy with respect to the volume/margin tradeoff? Is
          there some lower margin business that you are likely to turn down? Do
          you have a minimum transaction size?

      22. How often and in what security classes are you faced with more
          security supply than meets demand? What is your system of
          distributing this business equitably among your clients?

      23. Provide any comparative performance reports provided internally or
          externally from any source, that would substantiate your claims of
          having advantages in these areas.

      24. Have you, in the last four (4) years, ever had a situation where an
          institutional fund wanted to retain you to implement a direct borrow
          program and you were unable to come to an agreement with their
          custodian bank on how the program would be implemented? If yes,
          please explain the details pertaining to this situation.

      25. What is your organization’s strategy for growing your securities lending
          business?

      26. List five principal-based securities lending clients that we can contact
          for references. Note – we will not call any of these clients without
          contacting you in advance of our intention to do so. Also, if you have
          any clients that use more than one lending program and you have data
          that shows your comparative performance versus other lending
          programs, it would be especially advantageous to include this
          information.




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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


B. DIMENSIONS OF DIRECT BORROW PROGRAM
      1. Outline the key strengths and weaknesses of your firm’s securities
         lending program.

      2. What was the total market value of clients’ securities available for loan
         in your direct borrow program as of 12/31/08?

      3. What was the total U.S. market value of clients’ securities on loan in
         your program as of 12/31/08?

      4. In aggregate, how many direct borrow clients do you currently serve?
         Please provide a breakdown by client type (i.e., investment manager,
         mutual fund, public fund, corporate, endowment/foundation, bank)
         including the number of clients and value of securities on loan. Also,
         please break out by clients’ location (country).

      5. Approximately what percentage of total securities that you borrow are
         represented by your direct borrow program in the U.S.? Outside of the
         U.S.?

      6. Provide an overview of your prime brokerage business. How many
         prime brokerage clients do you serve? What are the dimensions of
         your prime brokerage area inside and outside of the U.S.?

      7. How many employees do you have in the following capacities
         pertaining to your securities lending business in the U.S.:

                               POSITION                                                            NUMBER OF EMPLOYEES
               Senior management
               Traders
               Operations
               Systems
               Credit
               Collateral reinvestment specialists
               Other (specify)




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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                               CORPORATE BONDS PRINCIPAL-BASED
                                 SECURITIES LENDING SERVICES


C. OPERATIONS
      1. What specific procedures and control points do you rely on to support
         the operations of your lending program?

      2. What impact has the current financial crisis had on your securities
         lending program?

      3. What operational changes have you made because of the financial
         crisis?

      4. What lessons have you learned from this crisis?

      5. How are recalls and income collections handled for securities out on
         loan? What percentage of the time do you encounter problems
         recalling securities by the target date?

      6. Have you ever experienced a situation in which you were unable to
         reclaim a client’s lent security? If yes, please describe the situation
         and what steps you took to rectify the situation.

      7. What limitations might there be on our ability to recall securities on
         loan?

      8. Have any of your clients ever experienced a loss with buy-ins or
         corporate actions with respect to securities on loan or a cash collateral
         reinvestment loss while in your program? If yes, please provide details.

      9. What forms and what percentage of collateral are you proposing to
         provide?

      10. Outline the steps taken in the marking-to-market procedure, detailing
          the timing and frequency of the procedure, pricing sources, and
          communications of collateral deficiencies to the counter party. What
          pricing vendors are used? Do you perform the marks or does the
          custodian?

      11. Do you have any principal third-party lending clients whose assets are
          custodied at The Bank of New York Mellon (BNY Mellon)? If yes,
          please describe the transaction flow associated with your securities
          lending activity. Please answer the question in each of the following
          categories:

                           -      Transmission of availability files
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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                               CORPORATE BONDS PRINCIPAL-BASED
                                 SECURITIES LENDING SERVICES


                           -      Loans of new securities
                           -      Returns of securities
                           -      Recalls
                           -      Corporate actions
                                     o Voluntary
                                     o Mandatory
                           -      Collateralization requirements and timing
                           -      Marks-to market
                           -      Income collection
                           -      Reconciliations

      12. Do you have an automated interface with BNY Mellon? If yes, what
          information is uploaded/downloaded and on what frequency?

      13. List current BNY Mellon clients with which you interface.

      14. How would you characterize your relationship with BNY Mellon?

      15. Specify those tasks you propose to be responsible for and what BNY
          Mellon would be required to do.




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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES



D. SYSTEMS / CLIENT REPORTING
      1. Identify and describe the various systems used to support your
         securities lending program and explain how they are linked.

      2. Which of these systems were developed internally? Externally?

      3. How are these systems maintained? Which are maintained internally?
         Externally?

      4. What functions are performed manually or using spreadsheets (i.e. not
         programmed as part of your “core processing” system)?

      5. What specific enhancements do you expect to make to these systems
         during the next 12-18 months? Rank the priority of these initiatives.

      6. Are you planning to undertake any systems conversions during the
         next two years? If yes, please explain which systems will be
         converted, when such conversions will take place and how these
         conversions will benefit your clients.

      7. Describe your backup and disaster recovery policies and procedures
         for all systems involved in supporting your securities lending business.

      8. What reporting is available that will enable clients to monitor and
         evaluate direct borrow program effectiveness? What reports are
         available electronically? Which are available via the web?

      9. Who are the auditors for your securities lending system(s) and
         information technology (IT) department? How frequently do formal
         audits occur and when was the last one completed?




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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES



E. REINVESTMENT OF CASH COLLATERAL
      1. Are you proposing to provide cash as collateral for all or part of the
         securities that you want to borrow from LACERA? If yes, please
         answer the questions in this section. If not, please go to section F.

      2. Do you have the capability to manage a separate cash collateral
         account for LACERA that meets LACERA’s collateral reinvestment
         guideline constraints as described in EXHIBIT I?

      3. What part of your organization (or affiliate) would manage the cash and
         what is their experience with similar direct borrow programs?

      4. Please provide an organizational chart and biographies of the
         individuals responsible for managing cash collateral. Include both
         years of experience and years with the firm.

      5. How many of your direct borrow clients use this capability?

      6. What is the value of short-term cash run by this group for direct borrow
         clients and for other clients?

      7. Where is your cash collateral reinvestment team located relative to
         your securities lending (trading) team? For how long has this
         arrangement been in place? What are the advantages/disadvantages
         of this arrangement?

      8. What procedures and control points do you use to ensure that cash
         collateral is managed in accordance with client investment guidelines?
         Which of these procedures and control points are fully automated and
         which are not?

      9. What is your policy if the portfolio manager purchases an instrument
         that is (or becomes) outside the investment guidelines?

      10. During the last five years, have you ever had a situation in which you
          purchased a security issued by a company (or its parent) that defaulted
          (on behalf of an individual client or STIF pool)? If yes, please describe
          the specific details surrounding this circumstance and explain your
          course of action.

      11. What type of management reports do you provide to clients regarding
          collateral reinvestment?

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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES



      12. Through what mediums can LACERA view data pertaining to collateral
          reinvestment?




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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES



F. REVENUE GUARANTEE / FEES
      1. Provide a firm revenue guarantee and/or hybrid proposal (by account)
         for borrowing LACERA’s corporate bonds on an exclusive basis for a
         term of 1 year and for a term of 2 years.

      2. Provide a comprehensive list of underlying assumptions for the
         borrowing of corporate bonds, including yet not limited to, the following:

                          Maximum and minimum balances
                          Rebate rate for cash collateral (if applicable)
                          Clauses regarding portfolio turnover and recalls

      3. Identify any additional fees associated with your proposal including, but
         not limited to, fees for management of cash collateral, custody
         expense, interface development, or auditing.




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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


 V. EXHIBIT I
PROPOSED LACERA COLLATERAL INVESTMENT GUIDELINES

SECURITIES LENDING STATEMENT OF INVESTMENT POLICY

CAPITALIZED  TERMS USED IN THIS EXHIBIT SHALL HAVE THE SAME MEANING AS SET
FORTH IN THE BODY OF THIS AGREEMENT UNLESS OTHERWISE INDICATED.



1.           INTRODUCTION
Lending Agent acknowledges that this Investment Policy has been developed to
serve two primary purposes: (i) to provide assurances to LACERA that Lending
Agent shall maintain the financial security of all LACERA Collateral received by
Lending Agent and its Agents from Securities lending transactions, and (ii) to
establish investment standards for the investment and management of LACERA
Collateral. Lending Agent agrees that this Investment Policy shall govern the
Collateral investment activities of Lending Agent and its Agents at all of Lending
Agent's offices and facilities, both domestic and foreign, including any offices
established by Lending Agent after this Agreement is executed. Lending Agent
and its Agents shall manage all investments of LACERA's cash Collateral
according to the following objectives and standards set forth in this Exhibit.

All cash Collateral investments made on behalf of LACERA shall be managed by
Lending Agent and its Agents in a segregated and separately managed fund.
Lending Agent and its Agents shall not pool LACERA's Collateral investments
with those of Lending Agent's other securities lending clients.


2.           OBJECTIVES
Lending Agent acknowledges and agrees that the key objectives of investing and
managing LACERA's cash Collateral are to:

             a.            Preserve principal through the use of high quality investment
                           instruments;

             b.            Ensure that all Collateral is invested in a timely manner;

             c.            Maintain a highly diversified portfolio of credit quality
                           instruments;


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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


             d.            Maintain adequate liquidity to meet the needs of LACERA
                           and/or LACERA's investment advisors; and

             e.            Optimize, consistent with these guidelines, the spread
                           between the rate earned on LACERA's Collateral and the
                           rate rebated to the Borrowers of LACERA's Securities, while
                           controlling the portfolio's investment risk.

In pursuing these objectives, Lending Agent and its Agents shall comply with all
applicable laws, rules and regulations governing securities lending activities,
collective trust funds, and the management of assets.


3.           USE OF AMORTIZED COST VALUATION
Collateral which is invested in a collective fund maintained by Lending Agent and
its Agents shall be assigned a value of approximately $1 per unit. Such
collective funds are operated on a cost, rather than a market value basis, for
purposes of admissions and withdrawals. If non-cash assets are required to be
sold prior to their maturity for purposes of affecting a participant's withdrawal from
such fund, it is possible that a loss will be realized.


4.           CREDIT QUALITY STANDARDS
Lending Agent's primary goal shall be to safeguard the return of LACERA's
Collateral. To minimize the risk of default, the following credit standards shall
apply to all Collateral investments:

             a.            Lending Agent will maintain a consolidated approval list for
                           short-term paper. Inclusion on the approval list requires the
                           highest rating by two rating agencies: A1 by Standard &
                           Poor's (S&P) and P1 by Moody's, or A1 by S&P or P1 by
                           Moody's and the equivalent by Fitch.

             b.            Deposit instruments must be rated by a Nationally
                           Recognized Statistical Rating Organization ("NRSRO") such
                           as IBCA. If no such rating is available, the short-term rating
                           requirements stipulated in Section 4-a of this exhibit will be
                           used.

             c.            Where an issuer has a long-term senior debt rating, a
                           minimum long-term bond rating of single A, by either S&P or

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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


                           Moody's, must exist for any investment being contemplated.
                           When no long-term rating exists for an issuer, the short-term
                           rating standard for this policy will be used.

             d.            Guaranteed Investment Contract ("GIC's") must have a
                           minimum AA rated claims paying ability by both S&P and
                           Moody's at the time of purchase. Bank Investment Contracts
                           ("BIC's") must be rated AA or higher by both S&P and
                           Moody's at the time of purchase. Funding Agreements must
                           issued by an insurer having a minimum of a AA rated claims
                           paying ability by both S&P and Moody's at the time of
                           purchase. In addition, Funding Agreements will reset daily
                           and have a 90 day or less put.

             e.            Asset-backed securities must have a minimum rating of AAA
                           by S&P, Moody's or equivalent nationally recognized
                           securities rating organization ("NRSRO").

             f.            The credit quality of any guarantor must meet the minimum
                           criteria stated above.

             g.            When an investment is unrated, the issuer of such
                           investment must have a debt rating that meets the minimum
                           credit quality criteria stated above.

If a security held as Collateral in LACERA's portfolio is downgraded below
investment grade, or if any money market or investment instrument is
downgraded by a major rating agency, below the acceptable credit ratings
stipulated in this Agreement, the decision to sell the security shall be made by
the portfolio manager. The decision to sell shall depend upon the time to
maturity, the reason for downgrading and account considerations.

Every effort should be made to liquidate downgraded positions within thirty-
(30) days. If a below minimum rated security is to be held in LACERA's portfolio,
a written recommendation must be forwarded to the governing Securities
Lending Account Review Committee for approval. In keeping with current
practices, LACERA will extend, if necessary, the holding period of a downgraded
security.

5.           ACCEPTABLE INVESTMENTS
Subject to the above Credit Quality Standards, all Collateral investments made
shall have at least a minimum coupon of zero and a redemption price equal to


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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


the lower of purchase price or par value. The following investment sectors have
been established as acceptable instruments for investing Collateral:

             a.            Money market instruments, including U.S. Treasury Bills,
                           U.S. Agency obligations, time deposits, discount notes,
                           commercial paper, banker's acceptances, certificates of
                           deposit, Yankee CDs and Euro CDs.

             b.            Repurchase Agreements collateralized at a minimum level
                           of:

                           (1)          102% utilizing obligations of the U.S.
                                        Government, Government agencies, mortgage-
                                        backed security agency pass-throughs, money
                                        market instruments and acceptable commercial
                                        paper.

                           (2)          105% utilizing asset-backed securities and
                                        private label mortgage backed securities, with
                                        an S&P and Moody's credit rating of AA/Aa or
                                        better.

                           (3)          105% utilizing corporate bonds with an S&P
                                        and Moody's credit rating of A/A or better.
                                        Corporate securities that are registered under
                                        the Securities Act of 1933 and are not restricted
                                        securities within the meaning of Rule 144 of the
                                        Act are eligible investments.

                           (4)          All Repurchase Agreements must be marked-
                                        to-market on a daily basis to ensure
                                        compliance        with    the aforementioned
                                        collateralization levels.

             c.            Reverse Repurchase Agreement transactions may be used
                           only as a vehicle to meet LACERA's portfolio's 30% minimum
                           daily liquidity requirement. The use of Reverse Repurchase
                           Agreements for leveraging purposes is prohibited.

             d.            Tri-Party Repurchase Agreements, in a separate form to be
                           mutually agreed upon in writing by the parties, will be subject
                           to the same minimum collateralization and marked-to-market
                           requirements as defined in the aforementioned Repurchase


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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


                           Agreement     and                         Reverse                  Repurchase   Agreement
                           transactions.

             e.            Notes, bonds, and debentures issued by the U.S. Treasury,
                           U.S. Government Agencies and U.S. corporations.

             f.            First-tier money market mutual funds, as defined under SEC
                           Rule 2a- 7.

             g.            Short-term investment funds trusteed by The Bank of New
                           York Mellon (BNY Mellon) or Lending Agent are approved
                           investments and are subject to the same investment
                           parameters described within this exhibit.

             h.            Issues of sovereign foreign Governments, supranational
                           entities, and foreign corporations denominated in U.S.
                           Dollars.

             i.            CATS, TIGRS, STRIPS, REMICS, CMOs, and other
                           instruments collateralized by obligations of the U.S.
                           Government and its Agencies.

             j.             Asset backed securities (i.e., CARS, CARDS, HELS).

             k.            Regular floating rate instruments indexed off of any one of
                           the following indices: Federal Funds rate; U.S. Treasury Bills;
                           London Interbank Offered Rate (LIBOR); and/or the
                           Commercial Paper Index.

             l.            Guaranteed Investment Contracts ("GIC's"), Funding
                           Agreements and Bank Investment Contracts ("BIC's") issued
                           by insurance companies and banks.

                           Note: Master    Notes  are    not     acceptable
                                 instruments. Broker/dealer obligations are
                                 not acceptable investments if Securities
                                 Loans are outstanding to the respective
                                 broker/dealer.

6.           PROHIBITED INVESTMENTS
Provider will maintain an approved Commercial Paper issuer list and a restricted
issuer list. These lists will be updated regularly and approved by the Provider’s
Credit Committee at least on a quarterly basis. The Provider will submit the lists
Los Angeles County Employees Retirement Association (LACERA)   Last printed 4/21/2011 4:41:00 PM                 Page 18 of 21
91454031-fa5e-4c55-a768-038d38750243.doc
       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


to LACERA each time an addition or deletion is made. In addition, LACERA will
retain the right to restrict any investment.


7.           MATURITY AND LIQUIDITY CONSTRAINTS
Lending Agent shall maintain the following maturity schedule and duration
exposure to provide adequate liquidity to cover redemptions and protect
LACERA's Collateral. "Liquidity" shall be defined as any acceptable investment
which matures in one business day, is payable on demand, or provides access to
funds on one business day's notice without resulting in a loss of principal (e.g.,
institutional money market funds).

             a.            The Lending Agent understands that LACERA wishes to
                           maintain a liquidity level such that the lending program will
                           not interfere with the management of LACERA’s portfolio.
                           The Lending Agent will provide adequate liquidity in the form
                           of overnight loans and investments and collateral not on loan
                           to ensure that the lending program meets the above
                           requirement.

             b.            Unless otherwise stated below and with the exception of
                           collateralized mortgage obligations and asset-backed
                           securities, the maximum stated final maturity for any one
                           investment will not exceed thirteen (13) months from time of
                           purchase.

                           (1)          Floating rate instruments may have a maximum
                                        stated final maturity of twenty-four (24) months
                                        from the time of purchase.

                           (2)          Reset Dates of Floating rate instruments will
                                        not exceed three (3) months from the time of
                                        purchase. (Reset dates will be utilized to
                                        calculate average weighted maturity.)

                           (3)          Guaranteed investment contracts, funding
                                        agreements and bank investment contracts
                                        may have a maximum stated final maturity of
                                        twenty-four (24) months from time of purchase.
                                        The put option date, payable on demand
                                        feature, or interest rate reset date, may not
                                        exceed three (3) months from the time of


Los Angeles County Employees Retirement Association (LACERA)   Last printed 4/21/2011 4:41:00 PM   Page 19 of 21
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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES


                                        purchase. This reset date will be utilized to
                                        calculate the average weighted maturity.

                           (4)          Call dates and put features may be used as the
                                        proxy for maturity date, only if there is
                                        substantial evidence that the call or put option
                                        will be exercised.

             c.            Fixed rate asset-backed securities (ABS) will have a
                           maximum average life that does not exceed thirteen (13)
                           months and a final stated maturity that does not exceed
                           sixty- (60) months. Floating rate ABS will have a maximum
                           average life that does not exceed twenty-four (24) months
                           and a final stated maturity that does not exceed sixty- (60)
                           months.

             d.            Collateralized mortgage obligations (CMO's) will have a
                           maximum average life that does not exceed thirteen (13)
                           months and a final stated maturity that does not exceed
                           thirty-six (36) months.

             e.            The average maturity of LACERA's entire portfolio will not
                           exceed 90 days.

                           Note: Lending Agent will also establish a separate
                                 liquidity plan to monitor maturity exposure
                                 and liquidity demands.


8.           DIVERSIFICATION STANDARDS
Lending Agent and its Agents shall comply with the following diversification
standards:

             a.            No more than 10% of LACERA's portfolio will be exposed in
                           the obligations of any one issuer, including all counterparty
                           risk, except those of the U.S. Government or that which are
                           U.S. Government guaranteed at the time of purchase.

             b.            Money market mutual funds will be limited to 10% of the
                           value of the money market fund.

             c.            U.S. Government strips will constitute a maximum of 15% of
                           LACERA's portfolio.
Los Angeles County Employees Retirement Association (LACERA)   Last printed 4/21/2011 4:41:00 PM   Page 20 of 21
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       LOS ANGELES COUNTY EMPLOYEES RETIREMENT ASSOCIATION
                            REQUEST FOR PROPOSAL
                             CORPORATE BONDS PRINCIPAL-BASED
                               SECURITIES LENDING SERVICES



             d.            No more than 20% of LACERA's portfolio will be invested in
                           any one sector at the time of purchase, except as noted
                           below:

                           (1)          Regular floating rate instruments will be limited
                                        to 40% of LACERA's portfolio at the time of
                                        purchase.

                           (2)          U.S. government and government guaranteed
                                        issues will be limited to 100% of a portfolio at
                                        the time of purchase.

                           (3)          Repurchase agreements will be limited to 100%
                                        of a portfolio.


9.           TRADING
All trades are to be placed by Lending Agent and its Agents on a best effort/best
price basis.




Los Angeles County Employees Retirement Association (LACERA)   Last printed 4/21/2011 4:41:00 PM   Page 21 of 21
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