Use of Posted Collateral (VM) - NY VM CSA Provision: Difference between revisions

Use of Posted Collateral (VM) - NY VM CSA Provision (view source)

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-{{csaanat|6(c)|2016ny}}
+{{csaanat|6(c)|2016ny}}This is the classic part of your security interest {{nyvmcsa}} that converts it into a [[title transfer]] {{vmcsa}}, meaning — cough, as with much New York law frippery — that you might as well not bother with a pledge or security interest in the first place.
+So I give my asset to you, right, carefully only [[Pledge|pledging]] it as [[Security interest|security]] for my [[indebtedness]] to you, and protect myself from your [[credit risk]] because I ''retain [[beneficial ownership]]'' of the asset. It is mine, not yours, and should you explode into a thousand points of light, then, once I have settled my trading account with your administrator, I can have my asset back.
+Right?
+Except that you have the right to sell my asset, absolutely, to anyone else you want to, at any time. Whereupon my claim against you is for the return of an asset you don’t have, and would have to go and buy in the market,  but since you have blown up, you can’t really do that, so I am, after all, your unsecured creditor.
+Oh, what sad times we live in.
+{{sa}}
+*[[Rehypothecation]]
+*[[Title transfer collateral arrangement]]