Pledge GMSLA: Difference between revisions
Jump to navigation
Jump to search
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 9: | Line 9: | ||
Now, if your lender is of dubious repute, from a credit perspective, you might have to hold capital against that credit exposure. Okay, it's only 5, but when you're a bank you do this in big size and it can add up. If, somehow, you can isolate the lender's credit exposure it is worth doing. | Now, if your lender is of dubious repute, from a credit perspective, you might have to hold capital against that credit exposure. Okay, it's only 5, but when you're a bank you do this in big size and it can add up. If, somehow, you can isolate the lender's credit exposure it is worth doing. | ||
In most cases, you can't: most lenders will want to use your collateral in their own operations (to defray the lending costs of lending the securities to you, right?). | In most cases, you can't: most lenders will want to use your collateral in their own operations (to defray the lending costs of lending the securities to you, right?). If they do this then the collateral is gone, and you have no choice but to be a creditor. | ||
Agent lenders are one class of lender who isn't so bothered about reusing the collateral, because ''it'' didn’t lend to you in the first place, but lent its client’s securities to you, and these clients aren't so bothered about reuse. | Agent lenders are one class of lender who isn't so bothered about reusing the collateral, because ''it'' didn’t lend to you in the first place, but lent its client’s securities to you, and these clients aren't so bothered about reuse. | ||