Financial weapons of mass destruction

The JC’s latest game - a Christmas Stocking Filler for sure!

Top Trumps^®Financial Weapons of Mass Destruction^®

CDO²

“Just like OCD, only in alphabetical order, and it will fuck you up.”

Docs	indentures, red herrings, 10b-5s, the works!	10
Amendability	Zilch. Oh, the trustee might agree amendments for you, you say? HAHAHAHAHA	10
Collateral	Shonky CDOs the manager couldn’t get out of the warehouse. And you just wrote a put on them.	8
Transferability	Theoretically high. Practically nil. No-one wants your toxic waste, senator.	6
Leverage	All the leverage you could want, and more. Especially in the junior tranches.	8
Fright-o-meter	All-out superpower confrontation. Straight-up toxic waste.	11

Top Trumps^®Financial Weapons of Mass Destruction^®

Repack Programme

“It’s exotic, it’s Caribbean, it’s transformative — but somehow just not that exciting any more.”

Docs	Propectus, agreements, supplements, swaps, global notes, side letters galore. Most exciting part: limited recourse. Yes: that exciting.	2
Amendability	Bugger all, because of the trust structure. What? You think the Trustee’s going to take a view?	7
Collateral	Fully funded. Note is fully collateralised.	4
Transferability	In theory unlimited: cleared, dematerialised bearer notes. In practice? Forget about it. No-one wants your home-made espievie notes.	7
Leverage	Not really.	3
Fright-o-meter	CAYMAN ISLANDS DUDE! In reality, depends what you put in it, but mostly tame.	5

• Template:Long form confirmation - FWMD
• Template:Futures - FWMD
• Template:ISDA - FWMD

Top Trumps^®Financial Weapons of Mass Destruction^®

OSLA

“Call that a short? That’s not a short. This is a short.”

Docs	Vague, arcane, outdated and no netting airbags.	4
Amendability	Bilateral, so yes, in theory — but more likely to tip out and sign up a fresh GMSLA.	2
Collateral	Yes. Could be stocks, bonds — anything.	1
Transferability	bilateral. Homey don’t ride that bus.	0
Leverage	Fully cash collateralised, but a bonus point for the contra-flow collateral haircut. The lender net borrows from the borrower. Nice.	1
Fright-o-meter	Generally sleepy “pluming of the financial, system” material, but shortsville, generally anachronistic and no netting, so GameStop freakout territory.	5

Top Trumps^®Financial Weapons of Mass Destruction^®

Synthetic equity swap

“All the pleasure of ownership; none of the responsibility!”

Docs	ISDA Master Agreement, 2002 ISDA Equity Derivatives Definitions and a master confirmation and, if you are lucky, a 75-page lockup. Call the legal eagles!	8
Amendability	Bilateral, so doable, but delta-one, so not much to amend.	3
Collateral	Reg VM and IM margined daily. If you are on dynamic margining and paying attention, not much to see here. If you aren’t, Armageddon.	7
Transferability	Daily liquidity, so no real need.	3
Leverage	Synthetic margin lending so yes. But your PB will — should —be all over you, so no.	5
Fright-o-meter	Until 27 March 2021, about 3. But since then, beset with evil spirits, succubi and incubi, and The Family Office Who Must Not Be Named.	10

• Template:Stock lending - FWMD

Top Trumps^®Financial Weapons of Mass Destruction^®

Repo

“Let’s go get sushi and not pay!”

Docs	Global Master Repurchase Agreement and Master Repurchase Agreement. Vague where it needs to be and not heavily negotiated.	3
Amendability	Bilateral, so yes, in theory — but would you, unless MiFID changed and you had to? No.	2
Collateral	Yes. Generally cash.	0
Transferability		0
Leverage	Fully cash collateralised, so nope.	0
Fright-o-meter	Sorry: not going to get hearts racing. You can’t even short with them.	1

• Template:Single name CLN - FWMD