The repo account procedures listed below should be used in conjunction with DTC’s existing Collateral Loan Program procedures.
The procedures listed below are an addition to DTC’s Procedures for Pledgees.
- Any organization (a ‘Receiver’) that is eligible to establish a pledgee account at DTC may establish a repo account at DTC. A repo account is available to effect repurchase transactions or other types of financing transactions through use of the procedures in DTC’s Collateral Loan Program where the parties wish to distinguish transactions from pledges of collateral. A repo account is identified with a separate account number from any pledgee account of the Receiver, and the repo accounts of Receivers are separately identified in all listings of accounts made available by DTC. Except as modified by these Procedures, all DTC procedures applicable to pledgee accounts are applicable to repo accounts.
- Whenever a Participant instructs DTC to deliver securities from the account of the Participant to a repo account of a Receiver, the Participant will be deemed to instruct DTC to transfer to the Receiver the entire interest in the securities which are the subject of the instruction, not a security interest or other limited interest in such securities. The terms of the transaction between the Participant and the Receiver (which may be a repurchase transaction or other type of financing transaction) are determined by agreement of the parties to the transaction.
- The operation of a repo account at DTC is identical to the operation of a pledgee account. As with a pledgee account, voting rights on securities credited to a repo account are assigned to the Participant which delivered the securities to the repo account. Cash dividend and interest payments and other cash distributions on such securities are credited to the account of the Participant. Distributions of securities for which the ex-distribution date is on or prior to the payable date, or in which the distribution is payable in a different security, are also credited to the account of the Participant. Any stock splits or other distributions of the same securities for which the ex-distribution date is after the payable date are credited to the repo account of the Receiver.
- The instructions for a delivery of securities to a repo account at DTC use the same data fields as the instructions for a pledge to a pledgee account. Those data fields include a mandatory hypothecation code field. A Participant delivering securities to a repo account must enter the number 7, 8 or 9 in the hypothecation code field. The entry of the number 7, 8, or 9 in the hypothecation code field of instructions for a delivery to a repo account does not constitute a notice or representation as to any matter by the delivering Participant. The entry of the number 7, 8 or 9 in the hypothecation code field of such instructions is merely an action needed to effect the delivery through DTC’s facilities. A Participant pledging securities to a pledgee account must continue to enter the number 1, 2 or 3, whichever is applicable, in the hypothecation code field. Participants are responsible for entering the appropriate number in the hypothecation code field for all transactions.
- The DTC reports and statements to the Participant and the Receiver for a transaction involving a repo account are the same as the reports and statements for a transaction involving a pledgee account. If the account number indicated in a DTC report or statement is the account number of a repo account, the information in the report or statement does not represent a pledge of, or other transfer of a limited interest in, the securities credited to the repo account but instead represents a transfer by the Participant to the Receiver of the entire interest in such securities.
- DTC will accept instructions solely from the Receiver with respect to the disposition of securities credited to the Receiver’s repo account. The Receiver may redeliver the securities to the Participant which delivered them to the Receiver’s repo account. The Receiver may instruct DTC to deliver securities credited to the Receiver’s repo account to the Receiver's DTC Participant account, if the Receiver is also a Participant, or to any other DTC Participant account. DTC has no duty to inquire whether any instruction to DTC from the Receiver is permitted by any agreement among the parties to the transaction. If a Receiver is unable to submit instructions to DTC by automated means, the Receiver may submit instructions by contacting DTC’s Settlement Department. Any Receiver that instructs DTC to deliver securities credited to the Receiver’s repo account to the Receiver or to a DTC Participant designated by it shall:
- be deemed to represent and warrant to DTC that (i) the Receiver has the right to have the securities specified in such instruction delivered to the Receiver or to a DTC Participant designated by it and (ii) DTC’s compliance with such instruction will not violate any notice of levy, seizure or similar notice, or order or judgment, issued or directed by a government agency or court, or officer thereof, and ,
- indemnify, hold harmless and agree, on demand, to reimburse DTC, its stockholders, officers, directors and employees from and against and for any and all claims, liabilities, obligations damages, actions, penalties, losses, costs, expenses and disbursements, including, without limitation, attorneys’ fees and disbursements (“Claims”), which they may sustain by reason of DTC’s compliance with such instruction except for any Claims which result from the gross negligence or willful misconduct of the person asserting a right to indemnification.