Looking for the definition of GC? The bondholders use the bonds as collateral to get cash through a repurchase agreement. Insurers sometimes balk at paying O & P, but they are legitimate costs of doing business and policyholders are entitled to collect insurance benefits …
While you’d typically use these acronyms in your marketing meetings and communications, they’re equally useful for social media communications, especially if you’re in a relevant niche. A hair cut is the percentage difference between what an asset is worth relative to how much a lender will recognize of that value as collateral.
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Find out what is the full meaning of GC on Abbreviations.com! GCF trades are also advantageous in that the use of the inter-dealer broker allows borrowers and lenders to net out all of their GCF repo obligations at the end of each trading day, greatly decreasing the number of costly securities and fund transfers that must take place. Since assets have different risk profiles, the haircut will be larger for riskier assets. This avoids the time-consuming process of swapping collateral if it becomes needed by the borrower. Understanding General Collateral Financing Trades (GCF) In essence, a bank or other lending institution has a large amount of cash and would like to lend it out at whatever rates it can get. General collateral financing (GCF) trades are a type of repurchase agreement executed without the designation of specific securities as collateral. General collateral financing (GCF) trades are a type of Corporations or banks who hold a substantial amount of high-quality bonds may be in a position to make a substantial profit, if only they can raise short-term cash. The counterparty (usually a bank) is guaranteed a profit so long as the transaction is not defaulted. Level 3: A business process flow that provides more detail to a Level 2 subprocess through the identification of activities, while remaining common to all federal departments and system-independent.
Because banks are able to lend on reserves, they can turn a minimal interest rate into something substantially better if they can make short-term loans on high quality assets. U.S. Treasury bills, notes, and bonds are accepted as GC, as are U.S. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Under a term repurchase agreement, a bank will agree to buy securities from a dealer and then resell them a short time later at a specified price. This process description is aimed at the executive level. The money market refers to trading in very short-term debt investments. Michael is a treasured find for me and my business.” Miles Austin Michael is one of the most creative, forward-thinking and positive people I deal with in business, and he always delivers above and beyond expectations. Repurchase agreements allow both of these parties to benefit. The implied repo rate is calculated by owning a bond and shorting a future or forward on that bond. Since GCF trades are often between banks or banking institutions, the initiating party can assume the counterparty has a significant amount of high-quality assets on hand, and can enter into the transaction with little worry for the details of the assets being used for collateral. Refers to companies that cater to the needs of other businesses. Feel free to add any Banking related abbreviations to the following table. The idea behind these trades is quite simple, though the execution of them can be complex. All rights reserved. B2B – Business to business. Margin is the money borrowed from a broker to purchase an investment and is the difference between the total value of investment and the loan amount. Repurchase agreements, or repo trades, are essentially short-term loans usually made between banks or between banks and other corporations that hold a large amount of corporate bonds, government bonds, cash or both. We explain the meaning of 500+ words, terms and acronyms. Fresh-thinking, innovative ideas and a willingness to roll up his sleeves and get things done. Investopedia uses cookies to provide you with a great user experience. General Contractors charge for Overhead and Profit (“O & P“) as line items on repair or rebuild estimates. This is especially useful if the transaction is open and closed before the end of the day. Business Case Essentials. This section takes the user through a strategic overview of a business case and is designed to assist users with creating a viable business case for a project, initiative, or other business development within the federal public service.