Our articles are written by experts in their field and include individual barristers, solicitors, academics, judges, and leading firms in relevant areas of practice. JIBFL offers authoritative insights into global banking and financial law, providing essential updates for legal practitioners and policymakers. Covering key topics like lending, security interests, derivatives, debt capital markets, banking and finance related disputes, crypto, FinTech and financial regulation, JIBFL serves as a trusted resource for navigating complex legal challenges and staying informed in the financial sector. If you would like to contribute, please email Amanda.Cohen2@lexisnexis.com.
Repos used in LDI should be seen as either loans or derivatives, but not neither!
© Copyright LexisNexis 2024. All rights reserved.
Defined benefit pension funds, having leveraged billions of pounds of their gilt positions using repos, were exposed to a fall in prices. This occurred in September 2022 and large losses were sustained. It is not permissible for pension funds to leverage their assets using loans or derivatives (other than for narrow specific purposes). The question then arises of whether repos are loans or derivatives, or something entirely different. Who bears the losses may well be dependent on the answer. The author’s conclusion is that repos are properly either loans or derivatives.
If you are already a User, sign in
Or you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this article in full.
Alternatively you can subscribe here to read unlimited content.
