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Here is where the lawyer’s yen for over-particularity can be a self-snooker. A [[prime broker]] or a [[custodian]] will like to take a general charge over not just securities, but the fund’s claim against the [[custodian]] in whose accounts they sit (even though that will usually be itself), and all the fund’s rights against its counterparties under market transactions (even though they will (largely) be itself). It is a moot point whether claims under a swap transaction ''referencing'' a bond or share count as “claims and rights over any of the above” so the [[path of least resistance]], paved with good intentions though it is, is just to register the charge and be done with it. | Here is where the lawyer’s yen for over-particularity can be a self-snooker. A [[prime broker]] or a [[custodian]] will like to take a general charge over not just securities, but the fund’s claim against the [[custodian]] in whose accounts they sit (even though that will usually be itself), and all the fund’s rights against its counterparties under market transactions (even though they will (largely) be itself). It is a moot point whether claims under a swap transaction ''referencing'' a bond or share count as “claims and rights over any of the above” so the [[path of least resistance]], paved with good intentions though it is, is just to register the charge and be done with it. | ||
That said, Section 408(3), in language that is no model of the deft use of the English language,<ref> | That said, Section 408(3), in language that is no model of the deft use of the English language,<ref>“For the avoidance of doubt, in the case of a mortgage or charge created over both—<br> | ||
:(a) an interest in anything specified in any of paragraphs (a) to (e) of subsection (1) ''[i.e., an FCR-eligible asset]''; and<br> | :(a) an interest in anything specified in any of paragraphs (a) to (e) of subsection (1) ''[i.e., an FCR-eligible asset]''; and<br> | ||
:(b) any property, assets or undertaking not falling within any of those paragraphs, | :(b) any property, assets or undertaking not falling within any of those paragraphs, | ||
the [[mortgage]] or [[charge]] shall, ''other than to the extent to which it is created over an interest in anything specified in any of the foregoing paragraphs of subsection (1)'', be regarded as a charge within the meaning of this Part. ''[emphasis added]''</ref> acknowledges that an unregistered charge will still be effective to the extent it covers FCR-eligible assets, even if it won’t work for other assets. Since the “other assets” part of a prime broker’s security, if it bites on anything at all, is basically thrown in for good measure, one might be inclined to take a bit of a view. Not that we would ''recommend'' anything quite so cavalier, of course. but if you were stuck in a corner. | the [[mortgage]] or [[charge]] shall, ''other than to the extent to which it is created over an interest in anything specified in any of the foregoing paragraphs of subsection (1)'', be regarded as a charge within the meaning of this Part.” ''[emphasis added]''</ref> acknowledges that an unregistered charge will still be effective to the extent it covers FCR-eligible assets, even if it won’t work for other assets. Since the “other assets” part of a prime broker’s security, if it bites on anything at all, is basically thrown in for good measure, one might be inclined to take a bit of a view. Not that we would ''recommend'' anything quite so cavalier, of course. but if you were stuck in a corner. | ||
''Nobody'' puts baby in a corner. | ''Nobody'' puts baby in a corner. | ||