How it works
How to create a perfected security interest with technical enforceability
Delivery-versus-Lock is a legal construction before it is a technical one. The documents create the security interest, the record keeper's lock gives control, and the receipt proves both. First the legal framework, then the operational steps.
The legal framework
How the security interest is created, perfected, evidenced and enforced.
The documents
The Master Terms are published by version and hash, never signed. Each participant signs one Participation Agreement, once, at its Control Location, in the local form. Each position gets one Credit Receipt.
Who acts: Published by the maintainer; signed by each participant once
Jurisdictions, status and governance of the text: legal programme · governance.
In operation
The five steps a position goes through, from request to release or delivery.
Originate
The collateral provider requests credit from its own system. Approved lenders quote by RFQ, from their own systems, on the credit RFQ message schema. Terms are agreed: amount, rate, eligible collateral, thresholds, price sources.
Who acts: Provider, lenders
Who does what
Three roles. The one in the middle keeps the record; it never lends and never takes the asset.
Owner of the asset
Collateral Provider
Keeps title, yield and the asset in its own account, but locked/frozen. Requests credit over RFQ & Pre-authorizes collateral transfer to secured party on default at origination.
Keeps the record
Control Location
Transfer agent, broker-dealer or custodian. Records the lock, issues the Credit Receipt, runs marks, and executes the pre-agreed delivery on a validated default. Never a lender, never a custodian of the secured party's property.
Lender, or margin taker
Secured Party
A bank, fund, prime broker. Quoting over RFQ from its own systems, settles the cash leg, holds the receipt as evidence of control and priority, and receives delivery on default.
FAQ
Something not answered here? Write to the maintainer.
No. The lock is a restriction recorded on the account or register the control location already keeps. The asset stays in the owner's name, with its yield and voting rights, until a validated default. Only then is what is owed delivered to the secured party.