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Template:Credit EODs under sft: Difference between revisions
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*{{isdaprov|Tax Event Upon Merger}} equivalent | *{{isdaprov|Tax Event Upon Merger}} equivalent | ||
'''Why not?''': Unlike an {{isdama}}, generally, [[securities financing]] transactions are generally short-dated (if [[repo]]s) or callable on notice (if [[stock loan]]s) and (unlike an {{isda}}, where margin is a function of an independent [[credit support arrangement]] which may or may not be there) daily margin is a structure feature of the transaction. If your counterparty suffers any kind of [[credit deterioration]], your margin (or its failure to pay it) should cover you, and if it doesn’t, you can immediately — or at least quickly — get out of your exposure. If they unwind okay—great. If they ''don’t'', you have them bang to rights on a {{{{{1}}}|Failure to Pay}}. Simples. | '''Why not?''': Unlike an {{isdama}}, generally, [[securities financing]] transactions are generally short-dated (if [[repo]]s) or callable on notice (if [[stock loan]]s) and (unlike an {{isda}}, where margin is a function of an independent [[credit support arrangement]] which may or may not be there) daily margin is a structure feature of the transaction. If your counterparty suffers any kind of [[credit deterioration]], your margin (or its failure to pay it) should cover you, and if it doesn’t, you can immediately — or at least quickly — get out of your exposure. If they unwind okay—great. If they ''don’t'', you have them bang to rights on a {{{{{1}}}prov|Failure to Pay}}. Simples. | ||
Your more perfidious counterparties might want to start crow-barring these events in — at least, ones like [[Illegality]] — especially if you, like many brokers, are in the habit of doing trades on term. An [[Illegality]] event ought not poop the nest, but a [[credit deterioration]]-related default events like [[DUST]] or [[Cross Default]] may, seeing as the very point of the term trade is to prove to your accountants you have stable financing of your [[margin loan]] operations. | Your more perfidious counterparties might want to start crow-barring these events in — at least, ones like [[Illegality]] — especially if you, like many brokers, are in the habit of doing trades on term. An [[Illegality]] event ought not poop the nest, but a [[credit deterioration]]-related default events like [[DUST]] or [[Cross Default]] may, seeing as the very point of the term trade is to prove to your accountants you have stable financing of your [[margin loan]] operations. | ||