Yeah!!
Well, I'm going to keep it safe with my brokerage account at Lehman Brothers and my checking and savings accounts at Wachovia Bank...
Loaning out stocks I own to the broker (or someone else)...What can go wrong??
- Thread starter Cabin111
- Start date
Yeah!!
Well, I'm going to keep it safe with my brokerage account at Lehman Brothers and my checking and savings accounts at Wachovia Bank...
@Cabin 111
From your post
• The principal risk in any securities-lending transaction
is counterparty default. Fidelity is your counterparty
on all fully paid lending transactions. If Fidelity were to
default on its obligations as defined in the MSLA, you
would have the right to withdraw the collateral from
the custodian bank in the manner described in the
Collateral Administration Agreements. In the event that
you make a withdrawal request, the bank will transfer
an amount equal to your current collateral amount (or
such lesser amount as you may have requested) to your
specified delivery instructions. If you were to choose to
use the collateral proceeds to repurchase securities, this
would be considered a new purchase and, potentially, a
taxable event.
From your post
• The principal risk in any securities-lending transaction
is counterparty default. Fidelity is your counterparty
on all fully paid lending transactions. If Fidelity were to
default on its obligations as defined in the MSLA, you
would have the right to withdraw the collateral from
the custodian bank in the manner described in the
Collateral Administration Agreements. In the event that
you make a withdrawal request, the bank will transfer
an amount equal to your current collateral amount (or
such lesser amount as you may have requested) to your
specified delivery instructions. If you were to choose to
use the collateral proceeds to repurchase securities, this
would be considered a new purchase and, potentially, a
taxable event.
Chewing chewing...I'm going to let it die.
Collateral Administration Agreement...I am sure will be in Fidelity's favor (their attorneys wrote it). I can't sue Fidelity if there were a problem...Always have to arbitrate. It would be like reading the fine print of an annuity.
Over the years, I have owned over 10 notes and deeds of trusts. I would read and write them carefully. A couple even had exclusion from bankruptcy...Though they were never tested in court. Over the last few years I wouldn't touch them (buy them). I look at the delays that were caused by Covid in the courts.
At my age I don't want to test new ground...Make sure there are no headaches to administer our estate upon death.
Collateral Administration Agreement...I am sure will be in Fidelity's favor (their attorneys wrote it). I can't sue Fidelity if there were a problem...Always have to arbitrate. It would be like reading the fine print of an annuity.
Over the years, I have owned over 10 notes and deeds of trusts. I would read and write them carefully. A couple even had exclusion from bankruptcy...Though they were never tested in court. Over the last few years I wouldn't touch them (buy them). I look at the delays that were caused by Covid in the courts.
At my age I don't want to test new ground...Make sure there are no headaches to administer our estate upon death.
It is like all risk management. Some is OK, but not enough to create a problem, but not none. I use IB's and make about 3% a year on very liquid, small and mid caps. You can chose which ones also.