Intraday valuation against end-of-day valuation

A day has one closing price and thousands of intraday prices. The test gives different answers depending on which of them it reads, and agreements differ on whether the lender may read the intraday ones.

Follow a single holding of 6,400 shares through one session. It opens at $118.40, so the collateral is worth $757,760. It falls through the morning to $104.75 at 11:20, valuing the collateral at $670,400. It recovers into the close and finishes at $112.30, worth $718,720. The balance is $512,000 throughout and the threshold is 74 percent.

At the open the permitted balance is $757,760 × 0.74 = $560,742.40 and the test passes. At 11:20 it is $670,400 × 0.74 = $496,096, and the balance exceeds that by $15,904; the ratio is $512,000 ÷ $670,400 = 76.4 percent. At the close the permitted balance is $718,720 × 0.74 = $531,852.80 and the test passes again, at a ratio of 71.2 percent.

So the day contained a breach of $15,904 that the end-of-day process cannot see. An overnight engine reading closing prices records nothing at all. A real-time monitor reading the 11:20 print records a failing account, and where the agreement permits action on intraday values, the right to sell existed at 11:20 and expired without being exercised. The same session produced both facts, and which one governs is a drafting question rather than a market question.

Intraday monitoring does not make a lender faster at the same test. It makes the lender's test read a lower number, because the lowest price of a day is always below its close.