Equivalent: Difference between revisions
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{{a|glossary|}}''Warning: metaphysical area approaching. Approach stacked turtles with care.'' | {{a|glossary|}}''Warning: metaphysical area approaching. Approach stacked turtles with care.'' | ||
AKA [[fungible]]. When you you have been given something — [[credit support]], for very good example — which at some point you’ll have to give back. | AKA [[fungible]]. When you you have been given something — [[credit support]], for very good example — which at some point you’ll have to give back. You have to give an ''identical'' thing back. | ||
In any case, you want to hand over something that is ''identical'' to, but isn’t exactly ''the'' something that you were given. But it is ''exactly'' the same. | Now, when it comes to return it, ''dilemma'': you’ve been mucking around with it. You don’t still have “it”, per se. You can go and buy a new one, but the actual one they gave you — that’s goneski. | ||
Hey — you got it by [[title transfer]], so it was yours to muck around with wasn't it? Or, hey, ok so they [[pledge]]d it to you, but you had, you know, a right of [[rehypothecation]] didn’t you, so you were allowed to muck around with it.<ref>Or, just as commonly and more innocuously, you held it in a [[dematerialised]] [[omnibus]] [[custody account]], with fungible assets owned by other customers, and never did ''anything with it, but you still can’t tell whose bit is whose.</ref> | |||
All true. And just so. In any case, you want to hand over something that is ''identical'' to, but isn’t exactly ''the'' something that you were given. But it is ''exactly'' the same. For most purposes in this day and age that is fine, and indeed will support your [[title transfer]] analysis, should you be in the market for a [[true sale opinion]]. | |||
Seeing as, in the case of [[dematerialised securities]] held in a [[clearing system]] (in other words ''all'' [[Transferable security|transferable securities]]) this is a rather arid ontological distinction at the best of times, but it is one must firmly in the front of one’s mind when considering fundamental tools of our trade — [[close-out netting]], [[stock lending]], [[rehypothecation]] (anything that involves a [[title transfer collateral arrangement]] really) — lest the whole intellectual superstructure of modern [[credit risk mitigation]] should collapse before your eyes. | Seeing as, in the case of [[dematerialised securities]] held in a [[clearing system]] (in other words ''all'' [[Transferable security|transferable securities]]) this is a rather arid ontological distinction at the best of times, but it is one must firmly in the front of one’s mind when considering fundamental tools of our trade — [[close-out netting]], [[stock lending]], [[rehypothecation]] (anything that involves a [[title transfer collateral arrangement]] really) — lest the whole intellectual superstructure of modern [[credit risk mitigation]] should collapse before your eyes. | ||
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*[[Title transfer collateral arrangement]] | *[[Title transfer collateral arrangement]] | ||
*[[Pledge]] | *[[Pledge]] | ||
{{c2|Securities Lending|Collateral}} | {{c2|Securities Lending|Collateral}} | ||
Revision as of 16:32, 3 October 2019
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Warning: metaphysical area approaching. Approach stacked turtles with care.
AKA fungible. When you you have been given something — credit support, for very good example — which at some point you’ll have to give back. You have to give an identical thing back.
Now, when it comes to return it, dilemma: you’ve been mucking around with it. You don’t still have “it”, per se. You can go and buy a new one, but the actual one they gave you — that’s goneski.
Hey — you got it by title transfer, so it was yours to muck around with wasn't it? Or, hey, ok so they pledged it to you, but you had, you know, a right of rehypothecation didn’t you, so you were allowed to muck around with it.[1]
All true. And just so. In any case, you want to hand over something that is identical to, but isn’t exactly the something that you were given. But it is exactly the same. For most purposes in this day and age that is fine, and indeed will support your title transfer analysis, should you be in the market for a true sale opinion.
Seeing as, in the case of dematerialised securities held in a clearing system (in other words all transferable securities) this is a rather arid ontological distinction at the best of times, but it is one must firmly in the front of one’s mind when considering fundamental tools of our trade — close-out netting, stock lending, rehypothecation (anything that involves a title transfer collateral arrangement really) — lest the whole intellectual superstructure of modern credit risk mitigation should collapse before your eyes.
See also
- Fungible
- 2010 GMSLA: Equivalent
- Global Master Repurchase Agreement: Equivalent
- “Heavier than air flight is impossible”. I mean, how is this 580 tonne aeroplane, which I am sitting in thirty thousand feet in the air, not falling out of the sky (and onto Chicken Licken’s head)?
- Title transfer collateral arrangement
- Pledge
- ↑ Or, just as commonly and more innocuously, you held it in a dematerialised omnibus custody account, with fungible assets owned by other customers, and never did anything with it, but you still can’t tell whose bit is whose.