Loss of Stock Borrow - Equity Derivatives Provision: Difference between revisions

Loss of Stock Borrow - Equity Derivatives Provision (view source)

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 *Where {{eqderivprov|LOSB}} and {{eqderivprov|Hedging Disruption}} both apply and the same event could qualify as either, it will be treated as a {{eqderivprov|LOSB}} (which has milder consequences for the affected party).
 {{LOSD under synthetic pb}}
-{{comparison between LOSB and ICOSB}}'''Compare and contrast''' with {{eqderivprov|Increased Cost of Stock Borrow}}. There is a logical handoff and interaction between the two.
+{{comparison between LOSB and ICOSB}}
-*If the cost of a stock borrow exceeds the {{eqderivprov|Maximum Stock Loan Rate}} it is deemed to be (as good as) impossible to borrow stock, so it is treated as a {{eqderivprov|Loss of Stock Borrow}}, not merely an {{eqderivprov|Increased Cost of Stock Borrow}}. If a counterparty wants to apply Increased Cost of Stock Borrow whatever the cost of an available bid, the answer is to disapply {{eqderivprov|Maximum Stock Loan Rate}} altogether. This means that ''any'' possible stock borrow rate, however astronomical, comes under {{eqderivprov|Increased Cost of Stock Borrow}}, and {{eqderivprov|Loss of Stock Borrow}} (which is slightly more onerous a termination right) only applies where there are no offers in the market at all.
 {{seealso}}
 *{{eqderivprov|Triple cocktail}}