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Manufacture: Difference between revisions
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{{a|glossary|}}In the world of [[securities financing]] and [[title transfer collateral arrangement]]s, to “manufacture” income received on a security you have borrowed, purchased, or been delivered as collateral, is to pay an equal amount of cash to your counterparty representing that interest. paying the interest over | {{a|glossary|}}In the world of [[securities financing]] and [[title transfer collateral arrangement]]s, to “manufacture” income received on a security you have borrowed, purchased, or been delivered as collateral, is to pay an equal amount of cash to your counterparty representing that interest. paying the interest over. | ||
Compare, by way of alternative, interest accrual — where you don’t manufacture income but instead accrue | Because of the [[Title transfer arrangement|title transfer]] nature of these arrangements, this payment is your own [[Debt|debt obligation]] to your counterparty, not the underlying issuer’s, and should you go ''[[tetas arriba]]'' in that brief period between receiving the income and paying it away, that is your counterparty’s problem. | ||
But, that aside, this is all really rather finnicky stuff. You just pay over any interest as and when you receive it. Compare, by way of alternative, interest accrual — where you don’t ''manufacture'' income but instead ''accrue'' nominal interest every day and pay it at the end of the arrangement. | |||
=== In the various agreements: === | === In the various agreements: === | ||