Requirements to effect Delivery - GMSLA Provision: Difference between revisions

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 {{gmslaanat|4.2}}
+The beating heart of the legal basis of the {{gmsla}}.
+Even though there’s all this chat about {{gmslaprov|Loan}}s, in fact these transactions are exchanges having all the ''economic'' characteristics of [[loan]]s — the {{gmslaprov|Lender}} retains all economic risk to the asset being “lent”, and the {{gmslaprov|Borrower}} takes none of it — but all of not the ''legal'' characteristics of [[loan]]s. In legal terms, they are more like ''sales''.
+Legally speaking, the means by which {{gmslaprov|Securities}} and {{gmslaprov|Collateral}} move back and forth between parties to a [[stock loan]] is outright [[title transfer]]. Of course, the {{gmslaprov|Borrower}} ''could'' return the exact asset that it has borrowed, but it is not obliged to and, in most cases it won’t be able to: the very point of a [[stock loan]] is to “[[short sell]]” into the market the thing you have borrowed, but taken no market exposure to. As soon as you have done this it has gone for all money. You ''can’t'' get it back.
+What you ''can'' do is buy an identical one (the legal term is a “[[fungible]]” asset — an identical quantity of the same series, issuer and {{t|ISIN}} — and in [[stock lending]] lingo this is called an “[[equivalent]]” asset.
+As the [[Equivalent|article on that subject]] attests, as a term of legal art “[[equivalent]]” is a lot more specific than it is in ordinary parlance. It means something fungible; that is, identical in all economic respects.
+{{sa}}
+*[[Fungible]]
+*[[Equivalent]]