Template:Buy-in

Exercising a {{{{{1}}}|buy-in}}

Note that to determine the {{{{{1}}}|Default Market Value}} where a {{{{{1}}}|defaulting party}} is failing on a delivery of {{{{{1}}}|securities}} or {{{{{1}}}|collateral}} under a {{{{{1}}}|loan}} the {{{{{1}}}|non-defaulting party}} must sell (not buy) securities equivalent to those it is expecting back from a {{{{{1}}}|Non-Defaulting Party}}. This, we think, is to ensure that the price is “real”: the temptation otherwise would be for the {{{{{1}}}|Non-Defaulting Party}} to accept any old bid or offer, safe in the knowledge it can pass the cost on to the {{{{{1}}}|Defaulting Party}}.

Tricks to watch out for, especially in illiquid stocks, is that the {{{{{1}}}|Non-Defaulting Party}} is not somehow influencing the price at which that innocent third party might transact (by agreeing to enter an offsetting transaction at the same time). That would be fraudulent, of course.