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

{{eqderivprov|Loss of Stock Borrow}} is an {{eqderivprov|Additional Disruption Event}} in the  {{2002equitydefs}}, and is fondly abbreviated, by this commentator at least, to {{eqderivprov|LOSB}}.

{{nuts|Equity Derivatives|12.9(b)(iv)}}

But see also  {{eqderivprov|12.9(b)(vii)}} which deals with the tension between {{eqderivprov|LOSB}} and {{eqderivprov|Hedging Disruption}}.

'''Compare and contrast''' with {{eqderivprov|Increased Cost of Stock Borrow}}. There is a logical handoff 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.