All Trades Being Booked vs Cash
Where a trade is booked as a delivery-versus-payment (DVP) transaction, the trade instruction should be released immediately to the market. No holding of the instruction is required as the cash collateral will settle simultaneously with the loaned security.
For securities loans settled via a DVP instruction, where that cash represents the final collateral, the loan should be booked as a cash rebate transaction.
The ISLA Best Practice group discussed the management of cash pool transactions, where a securities loan is booked versus a fee and the cash element being a separate cash flow. It was agreed that DVP should not be used for cash pool trades due to the additional maintenance requirements and inherent risk of multiple cash movements. (IBP-182)
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