Template:Csa title transfer vs pledge: Difference between revisions

Template:Csa title transfer vs pledge (view source)

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 ==={{tag|Title transfer}} vs. {{tag|Pledge}}===
 This feels as good a time as any to raise the great subject of [[title transfer]] and [[pledge]]. In a {{nutshell}}:
-*'''Title Transfer''': The {{1995csa}} – outside the US, by far the most common type of {{csa}} – is a [[title transfer]] document:
+===='''Title Transfer'''====
-**when securities delivered to a party they become the recipient's property absolutely
+The {{1995csa}} – outside the US, by far the most common type of {{csa}} – is a [[title transfer]] document:
-**recipient does not hold them in custody for the transferor;
+*When securities delivered to a party they become the recipient's property absolutely
-**recipient has only an obligation to redeliver an equivalent security.
+*Recipient does not hold them in custody for the transferor;
-**Therefore no {{tag|CASS}} question arises at any point.
+*Recipient has only an obligation to redeliver an [[equivalent]] security.
+*Therefore no {{tag|CASS}} or [[custody]] question arises at any point - the transferor gives up all legal claims to the asset.
+*Nor does it make any sense to talk about the transferee’s right to [[reuse]] or [[rehypothecate]] the asset. It owns the asset outright: by definition it can do what it wants with it; the transferor can’t stop it.<ref>This doesn't stop [[triparty agent]]s requiring title transfer providers to grant their counterparties a right of reuse.</ref>
 *'''Pledge''': The {{1995csd}} and {{1994csa}}  are “pledge” documents:
 **The transferor delivers the securities to the receipient to hold for the transferor – the transferor retains title.
 **Recipient holds securities as transferor's custodian subject to a {{tag|security interest}} securing their obligation under the swap.
 **The custody arrangement only exists while recipient holds the security, not before.
-**Under US iterations of this form (e.g. the {{1994csa}}) the pledgee may nonetheless be entitled to sell the pledged asset absolutely, under a process known as [[rehypothecation]]. Don’t laugh. [[Amwell J|We]] think this converts the pledge into a [[title transfer collateral arrangement]] - at least at the point of [[rehypothecation]], if not before.
+**Under US iterations of this form (e.g. the {{1994csa}}) the pledgee may nonetheless be entitled to sell the pledged asset absolutely, under a process known as [[rehypothecation]]. Don’t laugh. [[Amwell J|We]] think this converts the pledge into a [[title transfer collateral arrangement]] — at least at the point of [[rehypothecation]].