OFR_2016_Financial-Stability-Report

Pension Funded Ratio
Pension Risk Transfer
Price Discovery
Primary Dealer
Regulation SCI
Reinsurance
Repurchase Agreement
(Repo)
Resolution Plans
Risk Assets
Risk-Based Capital
Risk Management
Risk Retention
The ratio of a pension plan’s assets to the present value of its obligations.
The transfer of pension risk from a pension plan to another party, usually through
insurance or annuity contracts, longevity swaps, or other contractual arrangements.
The process of determining the prices of assets in the market place through the interactions
of buyers and sellers.
Banks and securities broker-dealers designated by the Federal Reserve Bank of New
York to serve as trading counterparties when it carries out U.S. monetary policy.
Among other things, primary dealers are required to participate in all auctions of
U.S. government debt and to make markets for the FRBNY when it transacts on
behalf of its foreign official accountholders. A primary dealer buys government securities
directly and can sell them to other market participants.
An SEC regulation regarding technology infrastructure; it applies to entities that
directly support six key securities market functions: (1) trading, (2) clearance and
settlement, (3) order routing, (4) market data, (5) market regulation, and (6) market
surveillance. The rules in Regulation SCI are designed to reduce the occurrence of
systems issues, improve resiliency when systems problems occur, and enhance SEC
oversight and enforcement of securities market technology infrastructure.
The risk management practice of insurers to transfer some of their policy risk to
other insurers. A second insurer, for example, could assume the portion of liability in
return for a proportional amount of the premium income.
A transaction in which one party sells a security to another party and agrees to repurchase
it at a certain date in the future at an agreed price. Banks often do this on an
overnight basis as a form of liquidity that is similar to a collateralized loan.
See Living Wills.
Assets that carry risk, usually risk of price changes. Such assets include equities,
bonds, commodities, and most other investment vehicles, in contrast with U.S.
Treasury securities, which are generally considered safe.
Amount of capital a financial institution holds to protect against losses; based on the
risk weighting of different asset categories.
The business and regulatory practice of identifying and measuring risks and developing
strategies and procedures to limit them. Categories of risk include credit,
market, liquidity, operations, model, and regulatory.
Under the Dodd-Frank Act, a requirement that issuers of asset-backed securities
must retain at least 5 percent of the credit risk of the assets collateralizing the securities.
The regulation also prohibits a securitizer from directly or indirectly hedging the
credit risk.
Glossary 101