Securities lending: Difference between revisions
imported>Doug Williamson (Link with UK Money Markets Code page.) |
imported>Doug Williamson (Add alternative name - source - Practical Law - https://uk.practicallaw.thomsonreuters.com/4-107-7322?transitionType=Default&contextData=(sc.Default)&firstPage=true) |
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The borrower also gives the lender collateral in the form of shares, bonds or cash. | The borrower also gives the lender collateral in the form of shares, bonds or cash. | ||
The borrower pays the lender a fee each month for the loan and is contractually | The borrower pays the lender a fee each month for the loan and is contractually obliged to return the securities on demand within the standard market settlement period (e.g. three days for UK equities). | ||
obliged to return the securities on demand within the standard market settlement | |||
period (e.g. three days for UK equities). | |||
The borrower will also pass over to the lender any dividends or interest received, and corporate actions that may arise. | The borrower will also pass over to the lender any dividends or interest received, and corporate actions that may arise. | ||
In essence, the lender will retain the key rights they would have had if they had | In essence, the lender will retain the key rights they would have had if they had not lent the securities, except they will need to make special arrangements if they want to vote on the shares. | ||
not lent the securities, except they will need to make special arrangements if they | |||
want to vote on the shares. | |||
Securities lending is also known as ''stock lending''. | |||
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* [[Equity]] | * [[Equity]] | ||
* [[Irrevocable]] | * [[Irrevocable]] | ||
* [[Manufactured dividend]] | |||
* [[Prime brokerage]] | * [[Prime brokerage]] | ||
* [[Repurchase agreement]] | |||
* [[Security]] | * [[Security]] | ||
* [[Share]] | * [[Share]] | ||
* [[UK Money Markets Code]] | * [[UK Money Markets Code]] | ||
[[Category:Financial_products_and_markets]] | |||
Latest revision as of 07:52, 20 June 2022
Legally, a securities loan is the transfer of title in shares or bonds, against an irrevocable undertaking to return equivalent securities.
The borrower also gives the lender collateral in the form of shares, bonds or cash.
The borrower pays the lender a fee each month for the loan and is contractually obliged to return the securities on demand within the standard market settlement period (e.g. three days for UK equities).
The borrower will also pass over to the lender any dividends or interest received, and corporate actions that may arise.
In essence, the lender will retain the key rights they would have had if they had not lent the securities, except they will need to make special arrangements if they want to vote on the shares.
Securities lending is also known as stock lending.
