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Collateral Management by Michael Simmons

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CHAPTER 10Securities Lending & Borrowing and Collateral – Principles of SL&B

10.1 PRINCIPLES OF SECURITIES LENDING

The particular circumstances giving rise to securities lending include:

  • increasing the return on investment
  • reducing the cost of holding securities, and
  • reducing taxation through arbitrage strategies.

It is important to remember that throughout the period of any SL&B trade, the securities lender retains an investment (or economic) interest in the particular security; consequently, the securities lender remains exposed to fluctuations in price and value (despite the fact that the security ...

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