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| ====Rehypothecation generally==== | | ====Rehypothecation generally==== |
| {{Rehypothecation capsule}} | | {{Rehypothecation capsule}} |
| ====Interest Transfer====
| | {{{{{1}}} 6(d)(ii)}} |
| {{quote|
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| “George, you can type this shit, but I can’t say it.”
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| :— Harrison Ford, to George Lucas, about the script of ''Star Wars''}}
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| If you have got as far into the ghastly bowels of ISDA speak that you have been trying to parse the meaning of Paragraph 6(d)(ii)(A)(I) — just the numbering should tell you to stay well clear — then God’s speed to you. JC only got through it because he was multi-tasking while on an all-hands client money remediation legal workstream weekly stakeholder check in call, and frankly even ritualistic satanic torture would appeal compared to that. But what is it saying?
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| So:
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| You are holding Posted Collateral that pays some kind of income, in cash. Cash being cash, it is yours instantly: you can’t custody it.<ref>[[You can’t dust for vomit]].</ref> So you have to “[[manufacture]]” a corresponding payment. This is a finicky legalistic point — true, but finicky. But okay. You are about to make an equivalent cash payment to the Pledgor (Para {{{{{1}}}|6(d)(ii)(A)}}) — but the Pledgor also owes you more Posted Collateral (Para {{{{{1}}}|6(d)(ii)(A)}}(I)) (maybe the Exposure has moved in your favour). What to do?
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