[DRAFT–101806].doc

Agency Lending Disclosure Taskforce The A – Z Guide to ALD: A Comprehensive Set of Guidelines for Broker-Dealers and Agent Lenders Participating in Securities Lending on an Agency Basis December 7, 2006 Created by Capco Mariana Kind, mariana.kind@ John Surgent, john.surgent@  Disclaimer Any assumptions or regulatory interpretations expressed in this document are the product of ALD Taskforce (“Taskforce”) discussions and represent the consensus opinion of the Taskforce members. This information has been prepared for general informational purposes only. This information is not legal advice and should not be construed as legal advice. Firms should consult with qualified legal counsel before acting on the information provided herein. This information may be incomplete and may be changed at any time without notice. Table of Contents I. Introduction 5 A. Background 5 B. Requirements Overview 6 C. Credit Exposure 7 D. Regulatory Capital 9 E. Principal Level Books and Records 9 II. Relevant legal documentation 10 A. SEC No-Action Letter 10 B. Annex 1-A 10 C. Confidentiality Agreement 11 D. AML/CIP Compliance 11 III. Process Flows 12 A. Infrastructure Process Flow 12 B. Credit Pre-Qualification Process Flow 13 C. Regulatory Capital Process Flow 14 IV. Detailed Processing Descriptions 15 A. Information Transmission Options 15 B. Participant Firm Identification 16 C. Unique Principal Identification 16 1. U.S. Tax Identifier 16 2. Pseudo Tax ID 16 D. Credit Approval Process 18 1. Incremental Add/Delete File 18 2. Borrower’s Response File 24 3. Credit Master File 24 E. Credit monitoring at the principal lender level 25 F. Credit exposure breaches 25 G. Daily Loan Data and Daily Non-cash Collateral Files 27 1. Daily File Delivery Timeframe Guidelines 27 2. Holiday Schedule 27 3. Agent lender and broker-dealer Tax ID 27 4. Files sent per day 28 5. Daily Loan Data File 28 6. Daily Non-Cash Collateral File 32 H. Regulatory Capital Calculation 33 1. Net Capital