Hold and release methodology
It is best practice that individual loans should be released as soon as they are covered, and that a lender should not wait for an entire portfolio to be covered before starting to release trades. Additionally it should be recognised that the covering of a new loan could be through the release of collateral associated with the return of another loan, or through an overnight move in the value of the portfolio or collateral which produces an excess in collateral. The lender should consider various factors when deciding the order in which to release loans – this could include the settlement cut-off of that market, the value of the trade, upcoming record dates and could also be based upon borrower request. Vendor solutions are available to fully automate this process which also reduces the need for lenders and borrowers to have a physical presence in other regions to be able to facilitate an efficient hold and release model.
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