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Amwelladmin (talk | contribs) (Created page with "{{a|pb|}}Any amount standing to a customer’s account with a prime broker in excess of the minimum margin that the prime broker requires the customer to hold against its...") |
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{{a|pb|}} | {{a|pb|}}[[Margin excess]], or [[excess margin]], is any amount standing to a customer’s account with a [[prime broker]] over the minimum margin that the [[prime broker]] requires the customer to hold against its [[liabilities]]. This may be in the form of unrealised profit from live transactions, [[variation margin]] on swap positions credited to the customer’s account, or excess assets the customer has paid for but holds with the prime broker as [[custodian]]. | ||
[[Excess margin]], while the PB holds it, is subject to all the usual [[Security collateral arrangement|security arrangements]]; the only difference is that the customer does not ''have'' to let the PB hold it; but customers habitually do because it is convenient — they have to hold it somewhere, so why not with the good old [[prime broker]]? — and because it tends to make their [[prime broker]]s feel better about things, even if perhaps they shouldn’t.<ref>See {{CS report}}</ref> | |||
The reality about just when a customer may ask for its excess margin back — whenever it likes, in the normal run of things — can startle a complacent risk officer, but what a startled risk officer can then do if it doesn’t terribly like the idea of giving the [[margin excess]] back — reclassifying it as margin by means of a [[margin adjustment]] — tends to make the risk officer feel a bit better, even though she might not quite believe it. | The reality about just when a customer may ask for its excess margin back — whenever it likes, in the normal run of things — can startle a complacent risk officer, but what a startled risk officer can then do if it doesn’t terribly like the idea of giving the [[margin excess]] back — reclassifying it as margin by means of a [[margin adjustment]] — tends to make the risk officer feel a bit better, even though she might not quite believe it. | ||
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*[[Margin call]] and [[margin adjustment]] | *[[Margin call]] and [[margin adjustment]] | ||
*[[Archegos]] | *[[Archegos]] | ||
{{ref}} |