Lesson 18 of 20 · 6 min
Why the collateral lending value is usually not printed
It is a live computation, not a fact about a period, so a periodic statement is the wrong instrument for it.
Of all the figures a borrower would most like to see, collateral lending value is the most conspicuously absent. The reasons are largely structural, which is more useful to understand than assuming concealment.
Why it does not appear:
- It is a live figure. It changes with every price tick and every advance rate revision, so any printed value is stale the moment it is produced.
- A statement is a period document. Its job is to report what happened between two dates, and a collateral value is a state at an instant rather than an event in a period.
- It is a determination, not a measurement. Printing it as a number invites treating it as a commitment, which the agreement's discretion language is careful not to create.
- The systems are often separate. Custody and lending frequently run on different platforms, and the collateral figure lives in the risk system rather than in the statement generator.
The consequence, whatever the cause, is the asymmetry from Track 1 lesson 19 in its most concrete form. The lender knows the figure continuously. The borrower can compute it, from data they already have, and generally has to.
The good news is that the computation is not difficult and does not need to be precise. Applying stated advance rates to your holdings gets you within a few percent, and a figure that is roughly right and updated weekly is far more protective than an exact figure that arrives after the fact. The reconstruction in Track 1 lesson 20 does it in six lines.
The absence of the number is itself information: it tells you the figure is discretionary, live, and yours to compute.
Key terms
- Live figure
- A value that changes continuously with market prices. Cannot be meaningfully printed on a periodic document.
- State versus event
- A statement reports events in a period; collateral value is a state at an instant. Different kinds of information.
- Approximate monitoring
- Computing a roughly correct collateral value frequently. More protective than an exact figure computed rarely.
Worked example
Producing the missing number yourself
Holdings: $480,000 broad equity funds, $180,000 a single mid-cap holding, $82,000 a short-term bond fund. Schedule: 70% equity funds, 50% concentrated single names, 85% short-term bond funds.
- Equity funds
- $336,000
- Single mid-cap holding
- $90,000
- Short-term bond fund
- $69,700
- Collateral lending value
- $495,700
- Market value
- $742,000
- Time taken
- Under five minutes
$480,000 × 0.70.
$180,000 × 0.50.
$82,000 × 0.85.
Three multiplications and an addition produced the figure no statement prints. Illustrative advance rates, not any provider's schedule.
Check yourself
Why is collateral lending value generally absent from statements, and what should you do about it?
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Educational only. Nothing in this lesson is investment, legal or tax advice, or a recommendation to enter into any transaction. Figures are illustrative and computed from the inputs stated in the lesson.