Loss of Stock Borrow - Equity Derivatives Provision: Difference between revisions

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{{eqderivsnap|12.9(a)(vii)}}
{{eqdmanual|12.9(a)(vii)}}
====Commentary====
Compare and contrast with {{eqderivprov|Increased Cost of Stock Borrow}}. There is a logical handoff and interaction between the two.
*If the cost of a stock borrow exceeds the {{gmslaprov|Maximum Stock Loan Rate}} it is deemed to be (as good as) impossible to borrow stock, so it is treated as a {{gmslaprov|Loss of Stock Borrow}}, not merely an {{gmslaprov|Increased Cost of Stock Borrow}}. If a counterparty wants to apply Increased Cost of Stock Borrow whatever the cost of an available bid, the answer is to disapply {{gmslaprov|Maximum Stock Loan Rate}} altogether. This means that ''any'' possible stock borrow rate, however astronomical, comes under {{gmslaprov|Increased Cost of Stock Borrow}}, and {{gmslaprov|Loss of Stock Borrow}} (which is slightly more onerous a termination right) only applies where there are no offers in the market at all.
 
====Related Provisions====
 
 
{{eqderivanatomy}}

Latest revision as of 12:01, 13 October 2023

2002 ISDA Equity Derivatives Definitions

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12.9(a)(vii) in a Nutshell™

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12.9(a)(vii) in all its glory

12.9(a)(vii) “Loss of Stock Borrow” means that the Hedging Party is unable, after using commercially reasonable efforts, to borrow (or maintain a borrowing of) Shares with respect to such Transaction in an amount equal to the Hedging Shares (not to exceed the number of Shares underlying the Transaction) at a rate equal to or less than the Maximum Stock Loan Rate;

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