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If the {{gmslaprov|Lender}} decides to terminate, you are into the realm of the fabled and famous {{gmslaprov|mini close-out}}, wherein the {{gmslaprov|Lender}} exercises rights to terminate and value the {{gmslaprov|Loan}} by itself ''as if it were'' an {{gmslaprov|Event of Default}}, whilst not ''actually'' being an {{gmslaprov|Event of Default}}. | If the {{gmslaprov|Lender}} decides to terminate, you are into the realm of the fabled and famous {{gmslaprov|mini close-out}}, wherein the {{gmslaprov|Lender}} exercises rights to terminate and value the {{gmslaprov|Loan}} by itself ''as if it were'' an {{gmslaprov|Event of Default}}, whilst not ''actually'' being an {{gmslaprov|Event of Default}}. | ||
===So why isn’t a failure to return | ===So why isn’t a failure to ''return'' {{gmslaprov|Securities}} or {{gmslaprov|Collateral}} an {{gmslaprov|Event of Default}}?=== | ||
This reflects the reality that settlement failures in the equities markets are common and, seeing as the whole point of a [[stock loan]] is to provide the {{Gmslaprov|borrower}} with a security it can [[sell short]], the {{gmslaprov|Borrower}} is likely to be relying on someone else settling the security into it before it can return the security to the {{gmslaprov|Lender}} — as such the {{gmslaprov|Borrower}}’s failure is not necessarily evidence that your {{gmslaprov|Borrower}} is about to auger into the side of a hill. | This reflects the reality that settlement failures in the equities markets are common and, seeing as the whole point of a [[stock loan]] is to provide the {{Gmslaprov|borrower}} with a security it can [[sell short]], the {{gmslaprov|Borrower}} is likely to be relying on someone else settling the security into it before it can return the security to the {{gmslaprov|Lender}} — as such the {{gmslaprov|Borrower}}’s failure is not necessarily evidence that your {{gmslaprov|Borrower}} is about to auger into the side of a hill.<ref>The same is generally true of {{gmslaprov|Collateral}} returns (though not {{gmslaprov|Collateral}} ''deliveries'' - see paragraph {{gmslaprov|9.2}}.</ref> | ||
The {{gmslaprov|Lender}} has a self-help mechanism it can use to close out its market risk: a {{gmslaprov|buy-in}}. | |||
===What is a failure to pay or deliver then?=== | ===What ''is'' a failure to pay or deliver then?=== | ||
{{Failure to pay under GMSLA}} | {{Failure to pay under GMSLA}} | ||