Lending securities

Lending securities

Securities borrowed from a broker's inventory, from another customer's margin account, or from another broker, when a customer is required to deliver on a short sale.

Lending Securities

In short selling, the act or practice of placing one's own securities into the trust of another person or institution with the expectation that identical securities will be returned within a certain number of days (often three). The practice of lending securities is crucial to the borrower's hedging of risk: if the borrower were unable to obtain such a security, he/she would be unable to make a profit on a decline in the security's value. Securities are often lent by a broker and placed in a margin account. See also: Hedge fund.
References in periodicals archive ?
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.
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.
This reflects the essential character of a special collateral RP as a device for borrowing and lending securities.
Market participants may have come to the conclusion that Treasury would take unprecedented steps to resolve the fails problem and that there was less reason to continue to hold back on lending securities out of concern that the securities might not be returned promptly.
The central bank then put some muscle behind its words by pushing up overnight interest rates by lending securities to the banking system.
Lending securities plays an important role in the global financial system, and the size of the market is estimated between $1.
Securities lending involves transactions where lending institutions, including agent banks, pension funds, mutual funds and insurance companies earn incremental income on their portfolios by lending securities to borrowing institutions, typically broker/dealers, facilitating proprietary and customer short positions in the market.