Securities Borrowing &
Securities borrowing and lending (SBL) is a temporary loan of securities between the lender and the borrower. This is done to allow the borrower who expects the price of a stock to fall to hold a short position for a longer duration, while the lender who loans the stock receives a lending fee from the borrower.
SBL is an important activity in many markets as it provides greater liquidity, tighter spreads, better risk management and possibly reduces the cost of capital.
Beneﬁts of Securities Lending
- Potentially enhances yield of your portfolio
- No minimum lock-in period
- No disruption to trading activities
- Hassle free lending arrangements
Beneﬁts of Securities Borrowing
- Wide variety of stocks available
- Ease of borrowing
- No upfront deposit required
- Ability to sell through other brokerages
- Potential tool to cover error trade
- No financing fee