Mudenyo said the amendments ought to have had clear policies on
lending securities.
However, as became clear during the emergency bailout of the insurer American International Group (AIG) during the financial crisis in 2008, some insurance companies also engage in nontraditional activities, such as selling credit default swaps or
lending securities, that could pose a threat to financial stability.
The bank serves both Corporate Institutional and retail clients provides credit cards personal loans mortgages deposit taking and wealth management services to individuals and small to medium sized enterprises trade finance cash management
lending securities services foreign exchange debt capital market and corporate finance to corporate institutional clients.
25, 2011 (CENS) -- In response to the short selling of Taiwanese stocks by foreign investors with borrowed securities, the Financial Supervisory Commission (FSC) has resorted to five major measures, including reminding insurance firms to evaluate the returns and cost for lending securities to insurance firms and reviewing the legality of loan-oriented securities borrowing.
First, it will remind insurance firms to evaluate the cost and returns for lending securities to foreign investors, such as the effect on their own stock-investment positions.
Such activities include dealers making markets for customers, investors
lending securities to dealers to facilitate settlement of dealer sales, and arbitrageurs seeking to exploit, and thereby eliminate, price relationships that present abnormal profit opportunities.)
For example, through its securities lending program, AIG Financial Products unit was
lending securities, mainly related to the accumulation of insurance reserves, at maturities from over night to 2 weeks in duration.
In a separate interview, Crawford said that "unlike some of our competitors," Schwab itself will not be making any money from
lending securities in the ETFs, "all those revenues will go back to shareholders alone," he pledged.
In return for
lending securities, AIG typically received cash collateral worth between 100% and 102% of the securities being lent and then invested this cash until the loaned securities were returned, at which point the cash collateral had to be returned.
(6) Figure 2 shows the history of lending under this program initiated in December 2007--the same time that the Fed began
lending securities to primary dealers through the TSLF.
The central bank then put some muscle behind its words by pushing up overnight interest rates by
lending securities to the banking system.
This reflects the essential character of a special collateral RP as a device for borrowing and
lending securities.
