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Template:M comp disc GMSLA 11: Difference between revisions
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===ISLA [[thought leader]]ship=== | ===ISLA [[thought leader]]ship=== | ||
[[11 - Pledge GMSLA Provision|ISLA]] published a curious piece of thought leadership in September 2018 which painted a worst-case scenario timeline for closing out a {{pgmsla}} which made it look quite a bit worse than the corresponding critical path under a normal | [[11 - Pledge GMSLA Provision|ISLA]] published a curious piece of thought leadership in September 2018 which painted a worst-case scenario timeline for closing out a {{pgmsla}} which made it look quite a bit worse than the corresponding critical path under a normal GMSLA — hardly [[calculated]] to set at ease the jittery nerves of a very modern [[agent lender]]. The perceived difference was this: | ||
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|Upon notice of default {{pgmslaprov|Non-Defaulting Party}} can theoretically start liquidating but has value the pledged {{gmslaprov|Collateral}} to be transferred. This may take a bit longer in an illiquid market. But seems to the [[JC]] there’s no reason you can’t execute trades in the collateral without physically holding it, seeing as it settles later. Any excess goes back to the pledgor. | |Upon notice of default {{pgmslaprov|Non-Defaulting Party}} can theoretically start liquidating but has value the pledged {{gmslaprov|Collateral}} to be transferred. This may take a bit longer in an illiquid market. But seems to the [[JC]] there’s no reason you can’t execute trades in the collateral without physically holding it, seeing as it settles later. Any excess goes back to the pledgor. | ||
{{tablebottom}} | {{tablebottom}} | ||
In either case for the {{gmslaprov|Default Market Value}}, the main thing you’re valuing is the {{gmslaprov|Loaned Securities}} not (primarily) the {{gmslaprov|Collateral}}: as long as you aren’t ''under''-collateralised, and you take steps to get a reasonable price, you can sell ''all'' the {{gmslaprov|Collateral}} — remember, that’s how [[Security interest|security]] works — the Defaulting Party is in the soup and can’t be too particular about what happens to its collateral as long as, once the debt is satisfied, it gets the remainder back. If you ''are'' under collateralised, it doesn’t make any odds whether you hold by pledge or title-transfer —either way, you are short. | In either case for the {{gmslaprov|Default Market Value}}, the main thing you’re valuing is the {{gmslaprov|Loaned Securities}} not (primarily) the {{gmslaprov|Collateral}}: as long as you aren’t ''under''-collateralised, and you take steps to get a reasonable price, you can sell ''all'' the {{gmslaprov|Collateral}} — remember, that’s how [[Security interest|security]] works — the Defaulting Party is in the soup and can’t be too particular about what happens to its collateral as long as, once the debt is satisfied, it gets the remainder back. If you ''are'' under-collateralised, it doesn’t make any odds whether you hold by pledge or title-transfer —either way, you are short. | ||