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Template:Comparison between LOSB and ICOSB: Difference between revisions
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Template:Comparison between LOSB and ICOSB (view source)
Revision as of 15:37, 10 January 2019
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Amwelladmin (talk | contribs) (Created page with "===Comparison of {{eqderivprov|LOSB}} and {{eqderivprov|Increased Cost of Stock Borrow}}=== Compare and contrast {{eqderivprov|Loss of Stock Borrow}} with {{eqderivprov|Increa...") |
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===Comparison of {{eqderivprov|LOSB}} and {{eqderivprov|Increased Cost of Stock Borrow}}=== | ===Comparison of {{eqderivprov|LOSB}} and {{eqderivprov|Increased Cost of Stock Borrow}}=== | ||
Compare and contrast {{eqderivprov|Loss of Stock Borrow}} with {{eqderivprov|Increased Cost of Stock Borrow}}. There is a logical hand-off and interaction between the two: | Compare and contrast {{eqderivprov|Loss of Stock Borrow}} with {{eqderivprov|Increased Cost of Stock Borrow}}. There is a logical hand-off and interaction between the two: | ||
*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. | *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 {{eqderivprov|Increased Cost of Stock Borrow}} ''whatever the cost of an available bid'' — and given that it can pass the cost on, a [[Synthetic prime brokerage - PB Provision|synthetic prime broker]] might be happy to do this — 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. <br> | |||