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Clearing, Settlement and Custody, 2nd Edition by David Loader

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Chapter 7

Securities lending

Abstract

In this chapter we look at the vitally important area of securities lending and borrowing. We explore the development of lending from the need to enable trades to settle on time through to the huge use of borrowed securities by hedge funds selling short in the market and we look at cash financing through repos.

We consider the process stages and look at the operational needs that must be addressed, the role of the intermediaries like custodians and CSDs, the importance of collateral management, impact of corporate actions on a loan and the general risks and associated control requirements including the securities lending agreement.

Finally we look at the development of centralised lending and possible impact ...

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