Template:LOSD under synthetic pb: Difference between revisions
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Amwelladmin (talk | contribs) Created page with "==={{eqderivprov|LOSB}} under Synthetic PB=== For synthetic prime brokerage, it is common for the PB to pass on its stock borrowing costs (well: it is a synthetic..." |
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'''{{eqderivprov|Loss of Stock Borrow}} under [[Synthetic PB]]''': For [[synthetic prime brokerage]], it is common for the [[PB]] to pass on its stock borrowing costs (well: it is a synthetic equivalent of a stock borrow and a short sale, after all, so this makes sense). It does this by subtracting the prevailing borrow rate from the floating rate it pays under the swap. Therefore the {{eqderivprov|Non-Hedging Party}} wears the ultimate cost of the expensive [[stock borrow]], so there’s no real need to impose a {{eqderivprov|Maximum Stock Loan Rate}} (though [[prime broker]]s will typically impose one as a matter of course).<br> | |||
For [[synthetic prime brokerage]], it is common for the [[PB]] to pass on its stock borrowing costs (well: it is a synthetic equivalent of a stock borrow and a short sale, after all, so this makes sense). It does this by subtracting the prevailing borrow rate from the floating rate it pays under the swap. Therefore the {{eqderivprov|Non-Hedging Party}} wears the ultimate cost of the expensive [[stock borrow]], so there’s no real need to impose a {{eqderivprov|Maximum Stock Loan Rate}} (though [[prime broker]]s will typically impose one as a matter of course).<br> | |||
Latest revision as of 13:56, 19 May 2022
Loss of Stock Borrow under Synthetic PB: For synthetic prime brokerage, it is common for the PB to pass on its stock borrowing costs (well: it is a synthetic equivalent of a stock borrow and a short sale, after all, so this makes sense). It does this by subtracting the prevailing borrow rate from the floating rate it pays under the swap. Therefore the Non-Hedging Party wears the ultimate cost of the expensive stock borrow, so there’s no real need to impose a Maximum Stock Loan Rate (though prime brokers will typically impose one as a matter of course).