Template:Csa title transfer vs pledge: Difference between revisions

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**recipient has only an obligation to redeliver an equivalent security.  
**recipient has only an obligation to redeliver an equivalent security.  
**Therefore no {{tag|CASS}} question arises at any point.
**Therefore no {{tag|CASS}} question arises at any point.
*'''Pledge''': The {{csd}} and New York law {{1994csa}}  are “pledge” documents:
*'''Pledge''': The {{1995csd}} and New York law {{1994csa}}  are “pledge” documents:
**The transferor delivers the securities to the receipient to hold for the transferor – the transferor retains title
**The transferor delivers the securities to the receipient to hold for the transferor – the transferor retains title
**Recipient holds securities as transferor's custodian subject to a {{tag|security interest}} securing their obligation under the swap.
**Recipient holds securities as transferor's custodian subject to a {{tag|security interest}} securing their obligation under the swap.
**The custody arrangement only exists while recipient holds the security, not before.
**The custody arrangement only exists while recipient holds the security, not before.

Revision as of 11:32, 10 April 2015

Title transfer vs. Pledge

This feels as good a time as any to raise the great subject of title transfer and pledge. In a Nutshell™:

  • Title Transfer: The English law 1995 CSA – outside the US, by far the most common type of 1995 CSA – is a title transfer document:
    • when securities delivered to a party they become the recipient's property absolutely
    • recipient does not hold them in custody for the transferor;
    • recipient has only an obligation to redeliver an equivalent security.
    • Therefore no CASS question arises at any point.
  • Pledge: The 1995 ISDA CSD (English law) and New York law 1994 NY CSA are “pledge” documents:
    • The transferor delivers the securities to the receipient to hold for the transferor – the transferor retains title
    • Recipient holds securities as transferor's custodian subject to a security interest securing their obligation under the swap.
    • The custody arrangement only exists while recipient holds the security, not before.
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