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Template:LOSD under synthetic pb: Difference between revisions
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→{{eqderivprov|LOSB}} under Synthetic PB
Amwelladmin (talk | contribs) (Created page with "==={{eqderivprov|LOSB}} under Synthetic PB=== For synthetic prime brokerage, it is common for the PB to pass on its stock borrowing costs (well: it is a synthetic...") |
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'''{{eqderivprov|Loss of Stock Borrow}} under [[Synthetic PB]]''': For [[synthetic prime brokerage]], it is common for the [[PB]] to pass on its stock borrowing costs (well: it is a synthetic equivalent of a stock borrow and a short sale, after all, so this makes sense). It does this by subtracting the prevailing borrow rate from the floating rate it pays under the swap. Therefore the {{eqderivprov|Non-Hedging Party}} wears the ultimate cost of the expensive [[stock borrow]], so there’s no real need to impose a {{eqderivprov|Maximum Stock Loan Rate}} (though [[prime broker]]s will typically impose one as a matter of course).<br> | |||
For [[synthetic prime brokerage]], it is common for the [[PB]] to pass on its stock borrowing costs (well: it is a synthetic equivalent of a stock borrow and a short sale, after all, so this makes sense). It does this by subtracting the prevailing borrow rate from the floating rate it pays under the swap. Therefore the {{eqderivprov|Non-Hedging Party}} wears the ultimate cost of the expensive [[stock borrow]], so there’s no real need to impose a {{eqderivprov|Maximum Stock Loan Rate}} (though [[prime broker]]s will typically impose one as a matter of course).<br> | |||