Title transfer collateral arrangements under the Personal Property Securities Act 2009 (Cth): Paper IV securities as collateral

Abstract

It is often stated that shares are fungible, that is, one share of a particular class is interchangeable with another share of the same class. This alleged fungibility of shares is relevant to the characterisation of securities lending transactions; if correct then it becomes sensible to speak of the saleback aspect of such dealings as a sale of equivalent securities. If shares are not fungible then the reasons for that lack of fungibility may result in the saleback being of the same shares, with a greater risk that the transaction is classified as a mortgage. This paper investigates whether or not shares are fungible.