Treatment of shortfalls - CASS Provision: Difference between revisions

*a counterparty to a hedge fund fails to settle an open trade into that HF's {{tag|prime broker}}; while simultaneously  

*the {{tag|prime broker}} delivers a quantity of the same security to the market on behalf of a different hedge fund customer, relying to do so on that first purchase trade settling as intended ..

*there may be a temporary [[shortfall]] in the prime broker’s omnibus client custody account, pending resolution of the [[fail]].  

Usually the [[fail]] will be quickly remedied, but if it isn’t the [[PB]] must take action to reduce its customers’ credit exposure as a result of the shortfall. It does this by putting its own assets (or money) aside, on trust for the affected clients.