Borrowed money: Difference between revisions

Borrowed money (view source)

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 Are {{t|stock loan}}s and {{t|repo}} trades “[[borrowed money]]”? The term is not generally defined: you are expected to know it when you see it. Quoth that sage old ''eminence gris'', Simon Firth, in his book [http://www.amazon.co.uk/Derivatives-Law-Practice-Simon-Firth/dp/0421830204 Derivatives Law and Practice]:
-:“'''Borrowed money'''” is ... means money which has been paid on the basis that it is to be repaid at a future date. '''It therefore excludes amounts that are due to ordinary trade creditors and financing arrangements (such as [[repo]]s and the discounting of bills of exchange)'''.
+{{quote|“Borrowed money” ... means money which has been paid on the basis that it is to be repaid at a future date. ''It therefore excludes amounts that are due to ordinary trade creditors and financing arrangements (such as [[repo]]s and the discounting of bills of exchange)''.}}
 Mr Firth cites {{Casenote|Transport & General Credit Corp.|Morgan}} [1939] CH 531 as authority for this point. But there's a better reason: because of their respective collateral structures — both are daily [[Margin call|margined]] with a small [[haircut]] — neither involved significant indebtedness. The {{gmslaprov|Borrower}} of a [[stock loan]] typically gives up more in value of {{gmslaprov|Collateral}} than she “borrows” in stock. She isn’t ''really'' a borrower.