Clearance and Cost of carry: Difference between pages

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imported>Doug Williamson
(Update - source - Association of Corporate Treasurers - email from Naresh Aggarwal 16 Feb 2022.)
 
imported>Doug Williamson
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1. ''Securities markets.''
Cost of carry means the total net costs of holding an investment asset or market position.


The process of transmitting, reconciling and, in some cases, confirming payment orders or security transfer instructions prior to settlement, possibly including netting of instructions and calculating final positions for settlement.  
Cost of carry includes financing costs.


Sometimes the term is used (imprecisely) to include settlement.


Outside the securities market, this process is generally referred to as clearing.
For physical assets, cost of carry may include storage and insurance costs.


Cost of carry is usually calculated and stated after offsetting any income generated by the asset.


2.  ''Tax - transactions.''


In tax, a similar process to an advance tax ruling, also sometimes known as 'pre-clearance' or 'tax clearance'.
:<span style="color:#4B0082">'''''Cost of carry can be a price worth paying'''''</span>


:Update on treasury matters relating to the coronavirus...


3. ''Tax - taxpayers.''
:One treasurer had resisted pressure from the board to draw down on their RCF by drawing down on only 20% of the facility as a test case and then subsequently repaying the loan. They felt the cost of carry was unnecessary.


In some jurisdictions, a written confirmation that a taxpayer's tax affairs are in order, issued by the relevant tax authority.
:Another treasurer felt the cost of carry, by drawing down on the RCF and then depositing the proceeds, was a cost-effective insurance policy.
 
:''Association of Corporate Treasurers, 28 April 2020, Naresh Aggarwal, Associate Director Policy & Technical.''




== See also ==
== See also ==
* [[Advance tax ruling]]
* [[Backwardation]]
* [[Central counterparty]]
* [[Carry trade]]
* [[Clearing]]
* [[Contango]]
* [[Clearing house]]
* [[Revolving credit facility]] (RCF)
* [[Jurisdiction]]
* [[Reconciliation]]
* [[Security]]
* [[Settlement]]
* [[Transmission]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Cash_management]]
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]
[[Category:Liquidity_management]]

Revision as of 12:08, 27 May 2020

Cost of carry means the total net costs of holding an investment asset or market position.

Cost of carry includes financing costs.


For physical assets, cost of carry may include storage and insurance costs.

Cost of carry is usually calculated and stated after offsetting any income generated by the asset.


Cost of carry can be a price worth paying
Update on treasury matters relating to the coronavirus...
One treasurer had resisted pressure from the board to draw down on their RCF by drawing down on only 20% of the facility as a test case and then subsequently repaying the loan. They felt the cost of carry was unnecessary.
Another treasurer felt the cost of carry, by drawing down on the RCF and then depositing the proceeds, was a cost-effective insurance policy.
Association of Corporate Treasurers, 28 April 2020, Naresh Aggarwal, Associate Director Policy & Technical.


See also

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