Securities Borrowing &
Lending
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.
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Benefits of Securities Lending
- Potentially enhances yield of your portfolio
- No minimum lock-in period
- No disruption to trading activities
- Hassle free lending arrangements
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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