Template:Comparison between LOSB and ICOSB: Difference between revisions
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Amwelladmin (talk | contribs) Created page with "===Comparison of {{eqderivprov|LOSB}} and {{eqderivprov|Increased Cost of Stock Borrow}}=== Compare and contrast {{eqderivprov|Loss of Stock Borrow}} with {{eqderivprov|Increa..." |
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===Comparison of {{eqderivprov|LOSB}} and {{eqderivprov|Increased Cost of Stock Borrow}}=== | ===Comparison of {{eqderivprov|LOSB}} and {{eqderivprov|Increased Cost of Stock Borrow}}=== | ||
Compare and contrast {{eqderivprov|Loss of Stock Borrow}} with {{eqderivprov|Increased Cost of Stock Borrow}}. There is a logical hand-off and interaction between the two: | Compare and contrast {{eqderivprov|Loss of Stock Borrow}} with {{eqderivprov|Increased Cost of Stock Borrow}}. There is a logical hand-off and interaction between the two: | ||
*If the cost of a stock borrow exceeds the {{eqderivprov|Maximum Stock Loan Rate}} it is deemed to be (as good as) impossible to borrow stock, so it is treated as a {{eqderivprov|Loss of Stock Borrow}}, not merely an {{eqderivprov|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 {{eqderivprov|Maximum Stock Loan Rate}} altogether. This means that ''any'' possible stock borrow rate, however astronomical, comes under {{eqderivprov|Increased Cost of Stock Borrow}}, and {{eqderivprov|Loss of Stock Borrow}} (which is slightly more onerous a termination right) only applies where there are no offers in the market at all. | *If the cost of a stock borrow exceeds the {{eqderivprov|Maximum Stock Loan Rate}} it is deemed to be (as good as) impossible to borrow stock, so it is treated as a {{eqderivprov|Loss of Stock Borrow}}, not merely an {{eqderivprov|Increased Cost of Stock Borrow}}. | ||
*If a counterparty wants to apply {{eqderivprov|Increased Cost of Stock Borrow}} ''whatever the cost of an available bid'' — and given that it can pass the cost on, a [[Synthetic prime brokerage - PB Provision|synthetic prime broker]] might be happy to do this — the answer is to disapply {{eqderivprov|Maximum Stock Loan Rate}} altogether. This means that ''any'' possible stock borrow rate, however astronomical, comes under {{eqderivprov|Increased Cost of Stock Borrow}}, and {{eqderivprov|Loss of Stock Borrow}} (which is slightly more onerous a termination right) only applies where there are no offers in the market at all. <br> | |||
Revision as of 15:37, 10 January 2019
Comparison of LOSB and Increased Cost of Stock Borrow
Compare and contrast Loss of Stock Borrow with Increased Cost of Stock Borrow. There is a logical hand-off and interaction between the two:
- If the cost of a stock borrow exceeds the Maximum Stock Loan Rate it is deemed to be (as good as) impossible to borrow stock, so it is treated as a Loss of Stock Borrow, not merely an Increased Cost of Stock Borrow.
- If a counterparty wants to apply Increased Cost of Stock Borrow whatever the cost of an available bid — and given that it can pass the cost on, a synthetic prime broker might be happy to do this — the answer is to disapply Maximum Stock Loan Rate altogether. This means that any possible stock borrow rate, however astronomical, comes under Increased Cost of Stock Borrow, and Loss of Stock Borrow (which is slightly more onerous a termination right) only applies where there are no offers in the market at all.