ESBD_File_354385_TRS000475_Third-Party Securities Lending Agent Services_Final.pdf

Teacher Retirement System of Texas

Request for Proposals (RFP) Solicitation Name – Third-Party Securities Lending Agent Services

Solicitation No.: TRS000475 NIGP Class/Item Codes: 946-75

Anticipated Schedule of Events

March 27, 2024 Issuance of RFP

April 4, 2024, 3:00 p.m., Central Time Pre-Proposal Conference attendance is Non- Mandatory but strongly encouraged. Pre- Proposal conference will be held via Microsoft Teams Meeting. Conference call information provided in section I.13, Pre-proposal Conference.

April 9, 2024, 3:00 p.m., Central Time Deadline for Submission of Questions

May 3, 2024, 3:00 p.m., Central Time Deadline for Submission of Proposals Late Proposals will not be considered

Presentations/Demonstration Presentations or Interviews by Top-Ranked Respondents, if requested. TRS may elect to conduct presentations or demos as part of the evaluation process.

TBD Anticipated date of TRS Board of Trustees (Board) Meeting; Top-Scoring Respondents may be requested to present to the TRS Board of Trustees during this Board Meeting.

TRS Solicitation Name: Third-Party Securities Lending Agent Services TRS Solicitation No.: TRS000475

Solicitation Contents

I. Summary Details II. Definitions

III. Historically Underutilized Business (HUB) Subcontracting Plan (HSP) Information IV. Evaluation Process and Criteria V. Proposal Submittal

VI. Sample Contract

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Solicitation Section I:

Summary Details

TRS Solicitation Name: Third-Party Securities Lending Agent Services

I. Summary

1. Purpose/Overview Contractor will provide daily securities lending services as well as reinvestment of any cash collateral received and/or delivering that cash to TRS for general investment use.

2. Type of Solicitation Request for Proposal (RFP)

3. Issuing Agency

Procurement & Contracts 1000 Red River Street Austin, TX 78701-2698 ATTN: Aundre Petty

4. Purchasing Authority Competitive Procurement per Texas Government Code Section 825.103

5. Minimum Qualifications Proposals that do not meet the following minimum requirements will be rejected as non-responsive and disqualified:

1) Respondent must have sufficient experience (15+ years) in the securities lending space and be active in the lending market ($500+ billion in lendable assets).

2) Respondent must be either (i) an organization rated A- or better by a NRSRO or (ii) insured by an organization rated A- or better by an NRSRO.

3) Respondent must have existing infrastructure and relationship with State Street Bank and Trust to facilitate the transfer and settlement of securities with securities borrowers.

4) Respondents must obtain TX-RAMP Certification to the extent it provides cloud-based services.

6. Responses to Solicitation Respondents are required to submit responses in the TRS

Procurement and Vendor E-System (PAVES) for each Evaluation Criteria listed above. Please see “Proposal Submission Instructions” section on how to create a confirmed bidder account to submit a proposal.

7. Deadline for Proposals Received by Teacher Retirement System of Texas (TRS) no later than: May 3, 2024, 3:00 p.m., Central Time

8. Initial Contract Term Initial term will be two (2) years from the effective date of the contract.

TRS Solicitation Name: Third-Party Securities Lending Agent Services

9. TRS Optional Renewal Terms Two (2) one-year optional renewal terms

Please note: If the awarded contract includes renewal options, the proposed annual pricing will be applied to each renewal option. TRS does not allow for escalation of pricing for subsequent renewals under this solicitation.

10. TRS Procurement and Contracts Representative for this Solicitation

Aundre Petty Aundre.Petty@trs.texas.gov

All questions and inquiries about this solicitation must be sent to the Procurement and Contracts Representative only.

11. Contact with TRS Staff Upon issuance of this Solicitation, employees and representatives of TRS, other than the TRS Procurement and Contract representative identified in item number 10 above, will not discuss the contents of this Solicitation with any Respondent, potential Respondent, or its representatives.

Failure of a Respondent or any of its representatives to observe this restriction may result in disqualification of any related Proposal.

This restriction does not preclude discussions between affected parties for the purpose of conducting business unrelated to this Solicitation.

12. TRS Historically Underutilized Business (HUB) Coordinator

Blender Hill

(512) 542-6867 Blender.Hill@trs.texas.gov

TRS Solicitation Name: Third-Party Securities Lending Agent Services TRS Solicitation No.: TRS000475 mailto:XXXXX@trs.texas.gov

13. Pre-Proposal Conference April 4, 2024, 3:00, p.m., Central Time. Pre-Proposal Conference will be held virtually via Microsoft Teams. To receive an invite, Respondents must e-mail the TRS Representative identified in Item 10 by April 3, 2024, 12:00, p.m., Central Time.

By attending the pre-proposal conference, attendees allow TRS to include their name and email in the pre-proposal conference sign-in sheet to be included with an Addendum following the conference.

During the pre-proposal conference, TRS will provide an overview of how to register and submit a proposal in PAVES. Potential Respondents are encouraged to attend.

14. Solicitation Addenda Changes to items directly impacting the Solicitation will be posted on the Electronic State Business Daily (ESBD) located at www.txsmartbuy.com/sp and posted in TRS’ Procurement and Vendor E-System (PAVES) portal as an Addendum. See Subsection VIII.,A. PAVES, for information regarding PAVES portal access. It is the responsibility of an interested party to periodically check PAVES or the ESBD for updates to the Solicitation prior to submitting a Proposal.

15. Questions and Answers Questions regarding this Solicitation must be submitted in writing no later than April 9, 2024, 3:00 p.m., Central Time. See Subsection VIII., D. Question and Answer Period, for information on how to submit questions. Telephone inquiries will not be accepted. Each Respondent is solely responsible for verifying TRS’ receipt of its questions, if applicable, and Proposal by the deadlines specified in this Solicitation.

16. Respondent Presentations/Demonstrations

TRS may request that Top-Scoring Respondents present an overview of the Services proposed in their Proposals. The presentations will either be performed virtually or at the TRS offices located at, 1000 Red River Street, Austin, Texas.

Presentations/Demonstration; presentation/demo dates and times to be arranged. The number of Top-Scoring Respondents will be determined by TRS in its sole discretion.

http://www.txsmartbuy.com/sp

Solicitation Section II:

Definitions

TRS Solicitation Name: Third-Party Securities Lending Agent Services

II. Definitions

As used in this Solicitation, the following capitalized terms shall have the meaning specified below:

1. Agency or TRS: Teacher Retirement System of Texas

2. Agency Primary Contact: The person designated by TRS to be the point of contact between TRS and the Contractor for monitoring Contract performance and providing day-to-day interaction and instruction during the term of the Contract. Also referred to as “Contract Manager.”

3. Contract: The definitive written agreement resulting from this Solicitation executed by an authorized representative of TRS and Contractor that formalizes the terms, provisions, covenants, and obligations of the parties, including but not limited to those contained in this Solicitation.

4. Contractor or Vendor: The Respondent awarded a contract resulting from this Solicitation. The term “Contractor” or “Vendor” includes employees, representatives, agents, subcontractors, suppliers, and third-party service providers of the Contractor, regardless of how such persons or entities are employed or contracted by the Contractor.

5. Contractor or Vendor Primary Contact: The person designated by the Contractor/Vendor to be the point of contact between the Contractor/Vendor and Agency for scheduling, filling, contract management, and day-to-day management of Services under the Solicitation.

6. Days: Calendar days unless otherwise specified.

7. Employee; Contract Employee: Any individuals who, on behalf of the Contractor, will or may participate in providing Services under a Contract resulting from this Solicitation.

8. Financial Interest: Receiving, or having a right to receive, money or other valuable property or benefits under or in connection with the actual or proposed contract;

holding a position in a business such as a principal, officer, director, trustee, partner, employee, or the like, or holding a position of management; holding any of the outstanding debt of a person directly involved in the proposed or resulting Contract;

or owning stock or other interest in the business.

9. Fiscal Year (FY): The State of Texas and TRS fiscal year that begins September 1 and ends August 31.

10. Key Personnel: Individuals who contribute to the development or execution of a project in a substantive, measurable way and whose absence from the project would be expected to impact the performance of the Contract.

11. Offer, Proposal, or Response: The documents, including any exhibits or attachments, submitted by a Respondent in response to this Solicitation. “Offer” has the same meaning as “Proposal” or “Response,” when such terms are applicable in the solicitation document so titled as Request for Proposals (RFP), Request for Offers (RFO), or an Invitation for Bids (IFB), respectively.

12. Project Manager: The individual who, on behalf of the Contractor, will have primary responsibility for the planning, procurement, and execution of the project, in any undertaking that has a defined scope, defined start, and a defined finish, regardless of industry.

13. Relative: A current or former TRS employee’s spouse, father, mother, brother, sister, son or stepson, daughter or stepdaughter, mother-in-law, father-in-law, sister-in-law, brother-in-law, son-in-law, or daughter-in-law.

14. Respondent: The individual or entity submitting a proposal, offer, or bid in response to this Solicitation.

15. Responsive: A Proposal that meets all minimum qualifications, HUB requirements, and submission requirements.

16. Services: All requirements, duties, schedules, locations, and other items specified in this Solicitation. The term includes any services associated with the Contractor’s performance under a Contract resulting from this Solicitation. Also referred to as “Work.”

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Solicitation Section III:

HUB Subcontracting Plan (HSP) Requirements and Information

TRS Solicitation Name: Third-Party Securities Lending Agent Services

III. HUB Subcontracting Plan Information

In accordance with Section 2161.252 of the Texas Government Code and 34 Texas Administrative Code Section 20.285, each state agency that considers entering a contract with an expected value of $100,000 or more over the life of the contract (including any renewals) shall, before the agency solicits bids, proposals, offers, or other applicable expressions of interest, determine whether subcontracting opportunities are probable under the Contract. If subcontracting opportunities are probable, each state agency’s invitation for bids, requests for proposals, or other purchase solicitation documents with an expected value of $100,000 or more shall state that probability and if probable require a Historically Underutilized Business (HUB) Subcontracting Plan (HSP).

An evaluation of potential subcontracting opportunities was conducted for the Contract in accordance with Texas Government Code Section 2161.252, and it was determined that the Contract does not contain any probable subcontracting opportunities. Therefore, TRS is not requiring a HUB Subcontracting Plan (HSP) be submitted with responses to Solicitation.

However, if Respondent determines the need to subcontract for any services, materials and/or supplies to fulfill the terms of this contract, the Respondent must immediately inform TRS so that the solicitation may be updated, and the Respondent must submit a complete HUB Subcontracting Plan with its proposal to be considered responsive. The HSP form may be accessed at:

https://comptroller.texas.gov/purchasing/vendor/hub/forms.php.

TRS will provide guidance on navigating the State of Texas HUB forms and Respondent is encouraged to seek assistance in completing the HSP from the TRS HUB Coordinator, Blender Hill, at (512) 542-6867 or at blender.hill@trs.texas.gov if the Respondent is going to subcontract any portion of the work listened in the scope of work in the sample contract.

For purposes of the solicitation, TRS has determined that this procurement falls under the following category:

☐ Special Trade Contraction – The goal is 50% ☐ Professional Services – The goal is 10% x Other Services – The goal is 25% ☐ Commodities – The goal is 35%

If after the contract award the Contractor determines a need to subcontract for any services, materials, and/or supplies, the Contractor must contact TRS for prior approval and request a review of its HUB Subcontracting Plan in accordance with the good faith effort requirements found in 34 Texas Administrative Code Section 20.14. The Contractor may not utilize a subcontractor without prior written approval from TRS.

https://comptroller.texas.gov/purchasing/vendor/hub/forms.php mailto:blender.hill@trs.texas.gov

Solicitation Section IV:

Evaluation Process and Criteria

TRS Solicitation Name: Third-Party Securities Lending Agent Services

IV. Evaluation Process and Criteria

TRS reserves the right to award one or more contracts(s). At TRS’ sole discretion, TRS also reserves the right to cancel this Solicitation, make awards for some, but not all, categories of service, or make no awards.

TRS reserves the right to ask questions or request clarification from any Respondent at any time during the Solicitation process, including each stage of the evaluation process. All such questions shall be provided to the Respondent by the TRS Procurement and Contracts Representative for this Solicitation.

A. Minimum Qualifications

TRS will review the Proposals for compliance with the Minimum Qualifications stated below and the submission requirements detailed in PAVES. TRS’ review of the foregoing requirements will be made on a pass/fail basis. Failure to meet all requirements may, at any time, result in disqualification of the Respondent’s Proposal without further consideration or evaluation. Those Proposals which pass all Minimum Qualifications and submission requirements will advance to the Proposal Evaluation round.

Proposals that do not meet the following mandatory requirements will be rejected as non-responsive and disqualified:

• Item 1 – Respondent must have sufficient experience (15+ years) in the securities lending space and be active in the lending market ($500+ billion in lendable assets).

• Item 2 – Respondent must be either (i) an organization rated A- or better by a NRSRO or (ii) insured by an organization rated A- or better by an NRSRO.

• Item 3 – Respondent must have existing infrastructure and relationship with State Street Bank and Trust to facilitate the transfer and settlement of securities with securities borrowers.

• Item 4 – Respondent must obtain TX-RAMP Certification to the extent it provides cloud-based services.

B. Initial Round

The evaluation committee will evaluate all Responsive Proposals during the Initial Round.

After Initial Round evaluations, TRS may request that all or only the Top-Scoring Respondents participate in future rounds.

Responses and Best and Final Offers (BAFO) will be scored under best value standards that are in the best interest of TRS using the following general categories, for which weights are shown:

Evaluation Criteria Weight Respondent Qualifications, Indemnification, and References 10% Technical Approach to Securities Lending Transactions for Financing 60%

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Technical Approach to Securities Lending for Income Generation Operational Relationship with State Street Custodian Bank and Reporting Capabilities

10% 10%

Pricing 10% Total 100%

C. TRS Option for Presentation/Demo Round – Selection Criteria: 10 points After Proposal Evaluation Round evaluations are complete, TRS may (1) move on to a Presentation/Demonstration Round, (2) determine that this round is not necessary and move on to the Best and Final Offer (BAFO) Round, or (3) make one or more contract awards based on the Proposal Evaluation Round evaluations.

TRS may request that all or only the top-scoring Respondents participate in presentations/demonstrations. Respondent presentations/demonstrations allow Respondents to highlight the strengths and unique aspects of their Responses and provide answers to clarification questions TRS may have regarding the Responses.

Evaluation Criteria for Respondent Presentations/Demonstrations Round may include, but are not limited to:

1. Respondent’s demonstrated understanding of the RFP requirements and ability to satisfactorily describe the processes/methodologies for delivering the Services.

2. Respondent’s demonstrated experience in undertakings similar in scope and complexity to those indicated in this Solicitation, including past performance.

3. Respondent’s team member interaction and Respondent’s interaction with TRS.

4. Respondent’s presentation quality and ability to meet TRS’ needs.

5. Respondent’s ability to fit into the TRS culture.

After the presentations, the Respondent may be required to submit answers to questions asked during the presentation.

Presentations will be evaluated individually by each evaluator, who shall provide a score from 0 to 10, ten being the best/highest score (“Presentation/Demonstration Round”). The point allocation for the Presentation/Demonstration Round will not be added to any previous round or future round. The points determine which Respondent(s) move on to the next round.

D. TRS Option for Best and Final Offer (BAFO) Round If TRS decides to have a BAFO Round, a BAFO may be sought from all or only the top-scoring Respondent(s) participating in the BAFO Round. As the BAFO round is an optional round by TRS, TRS strongly encourages the Respondent to provide its best pricing and terms with its initial proposal.

BAFOs will be evaluated individually by each evaluator (the “BAFO Round”). TRS may request a Respondent provide additional information. All information provided during each

TRS Solicitation Name: Third-Party Securities Lending Agent Services phase of the evaluation process (including the BAFO) is considered during the BAFO Round.

The BAFO Round is scored based on the same criteria, scoring matrix, and point allocation as the Proposal Evaluation Round. The point allocation for the BAFO Round will not be added to any other round. The points in this round are used to determine the Respondent(s) final score.

E. TRS Board of Trustees (Board) Selection

The Contract(s) resulting from this Solicitation requires selection by the TRS Board of Trustees (“Board”). The evaluation committee for this Solicitation will identify the Top- Scoring Respondents using the Evaluation Criteria and Weights identified above. The Board will select the Respondent(s) from the identified Top-Scoring Respondents for contract award.

The Board will select the Response that, in the Board’s judgment, represents the best overall value for TRS based on the candidates’ qualifications, experience, proposed contract terms and conditions, proposed fees, and other relevant factors. “Best overall value” means a combination of factors that, in the judgment of the Board, are most consistent with the best interests of TRS.

Solicitation Section V:

Proposal Submittal Instructions

TRS Solicitation Name: Third-Party Securities Lending Agent Services

V. Proposal Submission Instructions

Respondents are required to submit their Responses to this solicitation through the TRS electronic procurement system called PAVES (Procurement and Vendor E-System). If awarded a TRS contract, the Contractor will be required to set up a PAVES account which requires:

• 2-factor authentication with a cell phone

• A separate login and password to be created for all Contractor contacts, including the

Contractor’s accounting department

• All invoices and deliverables must be submitted through the PAVES system

A. PAVES

Potential Respondents can find information about PAVES on the TRS website at:

https://www.trs.texas.gov/Pages/procurement_PAVES.aspx

The following instructions have been developed to assist vendors in creating and maintaining a PAVES account:

PAVES Basic Navigation for Suppliers New Supplier Registration How to Submit a Proposal How to Activate Supplier Profile (if awarded a contract)

B. Creating a PAVES Account and becoming a Confirmed Bidder

To become a Confirmed Bidder in PAVES, you must complete the New Supplier Registration process. By submitting your company’s information, login credentials will be generated, by which you can access PAVES. You will then be able to add additional company contacts, edit your profile, and bid on TRS solicitations.

The first step is to log into the PAVES supplier portal and follow the instructions for New Supplier Registration.

If, after submitting your registration, you receive an e-mail stating that your registration has been rejected, this is most likely because your company has already been registered in PAVES. The registration request will only be rejected if the Tax ID Number that is submitted already exists in PAVES. In this case, please contact the PAVES help desk at:

PAVESHelp@trs.texas.gov.

C. Submitting a Proposal in PAVES

1. Once you are logged into PAVES:

a. Click the “Solicitations” tab at the top

b. Then click “Show public request for proposals”

2. Click the pencil icon next to the name of the solicitation round in which you wish to participate

3. Click “Participate in RFx”

TRS Solicitation Name: Third-Party Securities Lending Agent Services TRS Solicitation No.: TRS000475 https://www.trs.texas.gov/Pages/procurement_PAVES.aspx https://www.trs.texas.gov/TRS%20Documents/PAVES-basic-navigation-for-suppliers.pdf https://www.trs.texas.gov/TRS%20Documents/PAVES-new-supplier-registration.pdf https://www.trs.texas.gov/TRS%20Documents/PAVES-submit-proposal.pdf https://www.trs.texas.gov/TRS%20Documents/PAVES-activate-supplier-profile.pdf https://trstexas-supplier.ivalua.app/page.aspx/en/usr/login?ReturnUrl=/page.aspx/en/buy/homepage https://www.trs.texas.gov/TRS%20Documents/PAVES-new-supplier-registration.pdf https://www.trs.texas.gov/TRS%20Documents/PAVES-new-supplier-registration.pdf file://ad.trs.state.tx.us/SDrive/General%20Accounting/PURCHASING%20TEAM/Desk%20Reference%20Manual/Solicitation%20Working%20documents%20-%20not%20ready%20for%20release/PAVESHelp@trs.texas.gov

4. You may be asked to click “I acknowledge receipt of this RFx”

5. Select “WILL BID: our intent is to respond to this RFx”

6. To complete the PAVES Questionnaire and submit a proposal for this solicitation, follow the instructions found in “How to Submit a Proposal.”

7. Please note that any solicitation documents, including Addenda, will be found in the section called “Round Documents” within the Overview tab of the Initial Round.

D. Question and Answer Period

All potential Respondents must create an account and review the solicitation before the deadline for submitting proposals. In addition, Respondents should note the deadline to submit questions concerning this solicitation on page 1 under the Anticipated Schedule of Events. Respondents may submit questions to TRS through the PAVES portal by participating in the Question Round of this solicitation and following the instructions found in “How to Submit a Proposal.”

https://www.trs.texas.gov/TRS%20Documents/PAVES-submit-proposal.pdf https://www.trs.texas.gov/TRS%20Documents/PAVES-submit-proposal.pdf

Solicitation Section VI:

Sample Contract

Contract Signature Page

This Contract is entered into effective on the date of last signature below (the “Effective Date”), by and between the Teacher Retirement System of Texas (TRS), with the principal place of business at 1000 Red River Street, Austin, Texas 78701 and [Contractor Name] (Contractor) with a principal place of business at [address, city, state, zip code]. TRS and Contractor are referred to collectively as “Parties” and each, “Party.”

TRS Contract Number: CTR000xxx

TRS Contract Name: Third-Party Securities Lending Agent Services

The Contract Amount: $XXXXXXXX

This amount is for the Initial Term of the Contract. TRS may increase the Contract Amount through an amendment when exercising Renewal Options.

The Effective Date: Date of the last signature below

The Expiration Date: Two (2) years from effective date

Renewal Option(s): Two (2) one-year periods

Description of Work: Contractor will provide daily securities lending services as well as reinvestment of any cash collateral received and/or delivering that cash to TRS for general investment use.

(TRS)

<<Vendor Name>>> (Contractor)

By: By:

Printed Name: Printed Name:

Title: Title:

Date: Date:

Vendor ID Number:

Procurement and Contracts Representative:

Printed Name:

Public Certification(s):

Date:

Please note: Attached is an example contract. A similar contract will be issued to the vendor awarded a contract from this solicitation. Several sections must be reviewed and/or updated in the proposal.

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Sample Contract - Contract Documents List

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Contract Documents List

The entire Contract between TRS and the Contractor consists of the Contract Documents listed on this page. In the event of any conflict or contradiction between or among the documents attached to or otherwise incorporated into this Contract, the following order of precedence will govern this Contract in the following order:

1. Contract Signature Page

2. Contract Documents List

3. TRS General Terms and Conditions

4. Scope of Work

5. Notices, Representatives, and Records Location

6. List of Key Personnel

7. Approved Price Form

8. Insurance Section

9. Contractor’s Insurance Certificate (incorporated by reference)

10. Code of Ethics for Contractors

11. Sample Release of Claims Form to be returned with final invoice

12. Non-Disclosure Agreement

13. Third-Party Assessment Form (incorporated by reference)

14. Confidentiality Policy

15. Confidential Information Procedures and Standards

16. Information Security Policies and Standards (ISPS)

17. Security Lending Policy

18. Contractor’s Best and Final Offer (incorporated by reference)

19. Contractor’s Response to Solicitation (incorporated by reference)

20. Solicitation number TRS000475 posted on March 27, 2024 (incorporated by reference)

21. Exhibits (listed below) (if applicable)

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Sample Contract – TRS General Terms and Conditions

This is a placeholder for the TRS General Terms and Conditions.

TRS’ General Terms and Conditions will become part of the awarded contract.

As part of the proposal process, the Respondent must review the linked document and provide any redlines for their proposal submission. All requested redlines must be included as part of the Respondent’s proposal, as there will not be another opportunity for redlines.

Please note that TRS may not award a vendor a contract due to excessive redlines to TRS

Terms and Conditions.

https://www.trs.texas.gov/TRS%20Documents/contract_general_terms_conditions.docx

Sample Contract – Scope of Work

Scope of Work

A. Introduction Teacher Retirement System of Texas (TRS), a public pension fund and entity of the State of Texas, issues this Request for Proposal to select a qualified Vendor to provide third party daily securities lending services, reinvest any cash collateral received, and/or deliver that cash collateral to TRS for general investment use (the “Services”).

B. Scope of Work

Background TRS is a service-oriented public pension system providing retirement, healthcare, and related benefit programs for Texas public education employees, retirees, and their beneficiaries (“Participants”). TRS’ mission is to improve the retirement security of plan participants and their beneficiaries by prudently investing and managing trust assets and delivering benefits that make a positive difference in members’ lives.

TRS investments focus on achieving superior long-term returns to secure Participants’ retirement futures and deliver benefits that enrich their lives. Our strong asset class diversification and innovative strategies ensure the highest possible, risk-adjusted rate of return. As Texas’ largest public retirement system, TRS ranks as the sixth largest in U.S. public pension plans and in the top 25 in the world.

Description of Work Respondent will provide daily securities lending services as well as reinvestment of any cash collateral received and/or delivering that cash to TRS for general investment use, as further described below.

1. Securities Lending for Income Generation

Respondent shall provide TRS with a securities lending program that must include the following minimum requirements:

a. Countries in which Respondent provides lending services, credit analysis, marking-to-market, indemnification policies, collateral policies, and the allocation system.

b. Ability to lend US and foreign fixed income and equities within US, EAFE, and EM markets and return securities to Custodian within standard settlement timelines.

c. Policy for when a sale fail occurs because a security was out on loan.

d. Ability to credit securities lending incomes and costs (fees, rebates, etc.) and account for them in TRS’s general ledger.

e. Method to allocate loans to the participating lenders.

f. Review of borrowers’ credit worthiness

g. Separately managed cash collateral and non-cash collateral investment accounts complying with TRS’s lending policy guidelines.

TRS Solicitation Name: Third-Party Securities Lending Agent Services

h. As required by Texas law, a contractual obligation to fully indemnify TRS against loss resulting from borrower default or the failure of the lending agent to properly execute its responsibilities under the lending agreement (Tex. Gov’t Code §825.303(b)).

i. Borrower credit quality monitoring.

j. Cash collateral credit quality monitoring.

k. Agreement to indemnify TRS from any unrelated business income tax assessed against TRS due to borrower default, lending agent’s breach of its obligations under lending agreements, or the lending agent’s failure to comply with the requirements of Internal Revenue Code Section 512.

l. Compliance rule system and monitoring.

m. Ability for TRS to impose restrictions on securities lending which are stricter than those of the lending agent, custodian, or sub-custodian.

Restrictions may include but are not limited to the following:

i. loan limits for specific borrowers, total loan limit, refusal to lend to a specific borrower and maximum term for loans. Comment on the firm’s ability and willingness to comply. Are the firm’s securities lending traders separated from the operational aspect of securities lending such as:

ii. delivery of loan securities;

iii. receipt of collateral;

iv. maintenance of broker and/or client credit limits on the system mark to market process;

v. billing of brokers and cash transfers;

vi. oversight of daily cash collateral investment decisions;

vii. transfer of cash to collateral investment accounts; and,

viii. measurement of duration or other risk associated with the management of cash portfolios performance measurement and chart reporting.

ix. Abide by third-party custodial operational agreements and terms should they be required to be enacted.

2. Securities Lending Financing Transactions Respondent must also have the ability to raise additional cash through lending of equities to specifically assist in meeting the financing needs of TRS.

This service should include, at a minimum:

a. Ability to segregate financing specific loans against cash.

b. Delivery of cash collateral from these transactions to Custodian to be commingled with other TRS cash and investments.

c. Ability to lend TRS portfolio on a stand-alone basis beyond any queuing processes in order to raise additional cash/lend equities on an as needed/temporary basis through tiered financing rates.

Deliverables Respondent will provide the following deliverables:

TRS Solicitation Name: Third-Party Securities Lending Agent Services

a. Access to application and any associated software

b. Daily reporting through email and/or SFTP including, at a minimum, but not limited to:

i. Loan detail

(1) CUSIP, SEDOL, and/or ISIN

(2) Share and Market Value on loan

ii. Earnings and Fees

(1) Gross Revenue

(2) Net Revenue due to TRS and to Contractor

iii. Cash and non-cash collateral details and balances

(1) Collateral Type

(2) Borrower

(3) Rebate Rate

(4) Collateral Market Value

iv. Financing balances

(1) Cash Collateral Market Value

(2) Borrower

(3) Financing Rate

v. Cash collateral investments

(1) Security Description

(2) Par Value

(3) Trade, Settle, Maturity Date

(4) Coupon/Yield and Spread

(5) Issuer Name

(6) Investment Credit Rating

(7) Fixed or Floating

(8) Country

(9) Weighted Average Maturity and Life

vi. Borrower Balances

(1) Borrower Legal Name

(2) Borrower Credit Limit

(3) Borrower Balances

vii. Other ad hoc requests as applicable

Acceptance Criteria for Deliverables

a. Deliverables mentioned above must be available and accurate.

b. Deliverables requested by TRS must be delivered via SFTP to TRS by 9 am CT each weekday morning and available on any Contractor portals.

c. TRS should have the ability to customize reports on any Contractor portals without assistance from Contractor.

d. Reporting must be efficient.

e. Any issues in delivery of reporting must be communicated in a timely fashion to avoid adverse impact on trade settlement or investment decision making.

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Invoicing Requirements NOTICE: Vendors are required to use the TRS vendor portal, Procurement and Vendor E-System “PAVES,” to submit invoices. For more information, go to: https://www.trs.texas.gov/Pages/procurement_PAVES.aspx.

Communication Plan Upon execution of the Contract, TRS will set up a kickoff meeting with Contractor’s project manager. At the kickoff meeting, TRS and the Contractor will review all the terms of the Contract and discuss:

• How to perform all the tasks outlined in the contract

• Deliverables of the Contract

• Timing of delivery of the Contract deliverables

• Required forms, such as insurance certificates

• Contract terms

• Invoicing requirements

• Performance monitoring

• Contract close-out process

Below is the established communication plan for this Contract which outlines how TRS and Contractor will communicate throughout the term of the Contract.

Contractor will communicate via email and phone with the following TRS Staff:

• James Nield, Chief Risk Officer

• Chris Pan, Investment Manager

• Jeff Batas, Senior Associate

• Elizabeth Sullivan, Trade Operations Associate

• Kerry Skehan, Trade Operations Manager

• Kelly Newhall, Investment Operations Manager

• Other TRS IDS Representative, [Investment Data Services Team]

• Other TRS IT Representative, [Investment Information Technology]

Day to Day activities will be between TRS’ Users and Contractor’s Representative. Any escalation will go to the TRS Contract Manager and Contractor’s Representative for Contractual Matters. On a calendar quarter basis, Contractor’s Primary Contact shall meet with TRS’ End Users to discuss completed, ongoing, and upcoming projects or research needs. These meetings can be either in person or via conference call. More frequent meetings may be required if either TRS or Contractor deems them necessary to ensure a project’s successful completion.

https://www.trs.texas.gov/Pages/procurement_PAVES.aspx

Contractor Staffing TRS reserves the right to request that Contractor replace any Contractor employee whom TRS judges to be incompetent, careless, unsuitable, or otherwise objectionable, or whose continued use is deemed contrary to the best interests of the State and TRS. Upon receipt of a formal written request from TRS’ Primary Contact, Contractor shall propose to TRS a replacement with the same or similar expertise as the individual being replaced who shall perform the services required by the Contract, subject to the approval of TRS.

Contractor may not use a subcontractor on this Contract without first receiving written approval from TRS regarding the proposed subcontractor. If Contractor is required to submit a HUB Subcontracting Plan (HSP) and the proposed subcontractor is not listed on the HSP, an amendment of the HSP will be required. Any work to be performed by such proposed subcontractor may not be initiated until the subcontractor has been added to the HSP.

As set forth in TRS’ Background Check Policy, a criminal background check (CBC) of Contractor’s staff is required if, at any time during the life of this Contract, the staff assigned to work on this contract meets any or all of the criteria listed below:

• Obtains a TRS user ID or password

• Has unlimited security badge access for any length of time

• Has limited security badge access for longer than 14 days

Further, a CBC may be required depending on the level of access to TRS resources and facilities that is required to perform the services. The CBC will be performed by TRS and the Contractor is required to reimburse TRS for the cost of the CBC within 30 days of receipt of notification that the background check is complete.

Performance Tracking TRS may consider Contractor’s performance during the life of the Contract. At the end of each term and before a renewal option is exercised, TRS will provide written feedback on Contractor’s performance. TRS reserves the right of non-renewal or early termination of the Contract for substandard performance. TRS reserves the right to publish and distribute results of the performance reviews or other quality or compliance reviews in accordance with 34 Texas Administrative Code section 20.509. If substantial deficiencies are identified by TRS regarding Contractor’s performance or competence in the delivery of services performed under the Contract, TRS may require corrective action to correct the deficiencies. TRS will monitor Contractor’s performance and may use the results of this monitoring to evaluate Contractor’s ability to provide adequate services to TRS in the Contract or in future contracts. If Contractor fails to meet Contract goals and expected results to TRS’s satisfaction, TRS may reduce the scope of or terminate the Contract at no cost or penalty.

When assessing performance, TRS retains sole authority to determine whether Contractor’s performance under the Contract is adequate.

The Contractor agrees to the following:

a) Provide all Deliverables in accordance with target due dates;

b) Provide TRS with written notice of any known or potential issues with service performance within 24 hours of Contractor becoming aware of any such issues;

c) Provide TRS with an action plan to resolve any known or potential service performance issues and status updates as required by TRS;

and

d) Timely respond to TRS staff questions within one to two business days.

Escalation Plan and Good Faith Negotiations Contractor shall provide an escalation plan for resolving known or potential issues with service performance that arise during the term of the Contract. The plan shall be subject to TRS’ approval and must explain how issues are to be prioritized and resolved and include Contractor’s representatives of increasing authority who have authority to resolve issues. The Parties will attempt in good faith to resolve any claim or controversy arising out of or relating to the execution, interpretation, and performance of services under the Contract through prompt negotiation between representatives of the Parties who have authority to settle the controversy.

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Notices, Representatives, and Records

Location

This is a placeholder for the approved and signed document.

The Notices, Representatives, Records Location is required to be completed by the Contractor and will become part of the awarded contract.

As part of the proposal process, the Respondent will be required to review the linked document, complete it, and submit it as part of their proposal submission.

https://www.trs.texas.gov/TRS%20Documents/notices-representatives-records-location.pdf

Sample Contract – List of Key Personnel

This is a placeholder for the list of Key Personnel from the awarded vendor’s winning proposal.

Please note that the awarded vendor must provide TRS with written notification of any changes to Key Personnel before changing approved key personnel, and all changes must be approved in writing by TRS.

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Approved Price Form

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Price Form

Respondent must enter a price for each item listed in this Price Form.

Unless otherwise described, the price is for one unit of each item (for example, one hour or one widget).

Where the unit is identified as “lump sum,” the price must be given for one complete item (for example, if the item is a contract task, deliverable, or milestone, the price must be given for completion of that task, deliverable, or milestone). If the item is completion of all Services, the price must be given for completion of all Services.

No additional amount will be paid for any costs or charges incurred by the Contractor, which are not listed on the price form.

If the Contract includes renewal options, pricing will be applied to each optional renewal term. Price escalation for renewal terms is not permitted under this Solicitation.

The quantities shown below are either estimated quantities or they are multipliers (weighting factors) used solely for evaluation of pricing.

Description

Basis for Fee (volume, service level, complexity)

Fixed Fee or Basis Points

Cost

Assumptions/Notes

Securities Lending Services

Securities Lending Split

Short Term Investment Pool Investment

Separately Managed Securities Lending Collateral Account

Financing-only Lending Fee

Other Services Please Explain & List Implementation Fees (one time cost)

Other Fees Not included above (Provide details for any additional fees not contemplated above)

Please Explain & List

Total Cost

Reimbursement is limited to direct costs (no indirect costs). All reimbursement requires pre-approval by the TRS Project Manager before the cost is incurred.

Insurance Requirements

Insurance Requirements

A. Coverages Required

Contractor shall obtain and maintain throughout the Contract term the insurance coverages listed below:

Workers’ Compensation Insurance:

Coverage to secure the payment of compensation to injured employees as defined in the Texas Worker’s Compensation Act.

Employer’s Liability Insurance:

Excess Liability and/or Umbrella Liability insurance may be combined in order to meet the following minimum amounts:

• Bodily Injury, $500,000 per accident;

• Disease, $500,000 per employee;

• Aggregate policy limit of $1,000,000.

Commercial Automobile Liability Insurance:

Coverage in the following minimum amounts for owned, hired, and non-owned vehicles for claims of automobile bodily injury and property damage which may arise in the performance of the Contract. Excess Liability and/or Umbrella Liability insurance may be combined in order to meet the following minimum amounts:

• $500,000 per person/$1,000,000 per occurrence for bodily injury; and

• $500,000 per occurrence for property damage; or

• $1,000,000 per occurrence if the policy is issued for bodily injury and property damage combined.

Commercial General Liability Insurance:

Coverage for claims of personal injury and bodily injury, including accidental death, and property damage which may arise from the performance of the contract. The types of coverage required are: Property Damage, Premises and Operations Hazards, Independent Contractor’s, and Contractual Liability. Excess Liability and/or Umbrella Liability insurance may be combined in order to meet the following minimum amounts:

• $1,000,000 per occurrence, $2,000,000 in the aggregate

Professional Liability Insurance:

Coverage for financial loss resulting from errors, omissions and failure to perform the professional services associated with the Contract. Coverage can be in the form of a claims made or per occurrence policy.

TRS Solicitation Name: Third-Party Securities Lending Agent Services

• $1,000,000 per occurrence

• $10,000,000 Combined Single Limit (CSL) if “claims made” policy.

Cyber, Privacy, and Network Security Liability:

Insurance covering all claims and losses arising out of a failure of Contractor’s network security or data protection.

• $5,000,000 in the aggregate.

Commercial Crime:

Coverage shall include employee theft, dishonesty, computer fraud, funds transfer fraud, forgery and/or alteration.

• $1,000,000 per occurrence, $1,000,000 in the aggregate.

B. POLICIES.

Contractor shall procure and maintain at Contractor’s own expense, throughout the term of the Contract and any renewals or extensions thereof, sufficient insurance coverage as may now or hereafter be necessary to insure against any claim(s) for damages based on a violation of Law or arising out of services provided or to be provided to TRS and the Project under the Contract. Such coverage and limits shall not reduce Contractor’s total liability under the Contract. To this end, Contractor shall comply with the following provisions:

• All insurance policies required under this paragraph shall be issued by companies authorized to do business under the laws of the state of Texas, licensed, eligible or registered under Texas law with a rating of A- or better in a financial size category of IV or higher according to A.M. Best Company.

• Contractor shall furnish to TRS evidence of all required insurance, validated by the certificate of insurance. Evidence of insurance shall display TRS as the Certificate Holder.

C. RENEWAL CERTIFICATES.

A TRS specific contract number associated with the Contract will be provided to the Contractor at the time of contracting. Contractor shall ensure that renewal certificates of insurance shall:

• Display the associated contract number in the description of operations section of the certificate

• Display required endorsements in the description of operations section of the certificate

• Be submitted electronically via PAVES

• List only the TRS specific contract number in the subject line of the e-mail

TRS Solicitation Name: Third-Party Securities Lending Agent Services

• Be furnished not more than thirty (30) days following the expiration of current policies

• Display TRS as the Certificate Holder

D. NOTICES OF CHANGE.

Contractor will notify TRS’ Contract Manager, at the address shown in the Contract and in writing by certified mail referencing the TRS contract number, of any cancellation, or material change, other than for non-payment, at least 30 days following receipt of such notice. in advance. Contractor must also notify TRS of any cancellation or material change due to non-payment at least 10 days in advance.

E. INSURANCE CERTIFICATE.

Contractor shall provide TRS with evidence of the insurance coverage required under the Contract. The different coverages requirements listed in section 1, COVERAGES; cannot be added together to meet the aggregate requirements listed. Contractor will submit the certificate to TRS no later than ten days after award of the Contract, or as directed by the Special Terms and Conditions. Certificates must bear the contract number of this Contract.

If Contractor changes insurers, Contractor shall give TRS a new certificate of insurance within ten days. The certificate of insurance shall set out any deductible or self-insured retention amounts for each coverage required.

F. REQUIRED ADDITIONAL PROVISIONS.

All policies of insurance shall include the following provisions:

• Waiver of subrogation in favor of TRS, its trustees and employees for bodily injury (including death), property damage or any other loss arising from the Contract; and

• The Contractor’s insurance must be primary insurance with respect to the TRS and its trustees and employees.

TRS Solicitation Name: Third-Party Securities Lending Agent Services

Historically Underutilized Business (HUB)

Requirements

HUB Subcontracting Plan Information

In accordance with Section 2161.252 of the Texas Government Code and 34 Texas Administrative Code Section 20.285, this contract does not require an approved Historically Underutilized Business (HUB) Subcontracting Plan (HSP).

However, if the Contractor determines a need to subcontract for any services, materials, and/or supplies to a subcontractor at any point during the life of this contract, the Contractor must contact TRS for prior approval and request a review of an HSP in accordance with the good faith effort requirements found in 34 Texas Administrative Code Section 20.14. The Contractor may not utilize a subcontractor without prior written approval from TRS.

If at any time during the life of this contract, the Contractor determines the need to subcontract, the Contractor must complete and sign a monthly Progress Assessment Report (PAR) form via TRS’ Procurement and Vendor E-System (PAVES) no later than the last day of the month for the life of the contract.

https://comptroller.texas.gov/purchasing/docs/hub-forms/ProgressAssessmentReportForm.xls

Sample Contract - Code of Ethics for Contractors

A Code of Ethics (COE) for Contractors is required to be signed by the Contractor and will become part of the awarded contract.

As part of the proposal process, the Respondent will be required to review the linked document, complete it, and submit it as part of their proposal submission.

https://www.trs.texas.gov/TRS%20Documents/ethics_contractors.pdf

Sample Contract - Release of Claims (This form must be returned with the last…