Collateral Management

CHAPTER 12Securities Lending & Borrowing and Collateral – Accessing the SL&B Marketplace

Within the Securities Lending & Borrowing (SL&B) part of this book, the three chapters which precede this chapter, namely:

• Chapter 9 ‘Securities Lending & Borrowing and Collateral – Introduction to SL&B’
• Chapter 10 ‘Securities Lending & Borrowing and Collateral – Principles of SL&B’
• Chapter 11 ‘Securities Lending & Borrowing and Collateral – The SL&B Trade Lifecycle’

all describe SL&B from the perspective of the securities being lent directly by the lender to the borrower. In addition to such a ‘Direct Lender to Borrower’ arrangement, other methods exist by which securities can be lent and borrowed, and related collateral can be managed. This chapter outlines those methods.

 

Today, a number of methods exist for securities to be lent and borrowed, including:

• direct lender to borrower contact
• use of a lending agent, and
• use of an ICSD’s failed trades management service.

Each of those SL&B methods is described within this chapter in Section 12.1 ‘Routes to Market’.

Furthermore, the management of collateral relating to the above-mentioned methods is described within Section 12.2 ‘Collateral Management’.

12.1 ROUTES TO MARKET

12.1.1 Direct Lender to Borrower Contact: Overview

This method involves direct communication between the securities lender and the securities borrower, therefore on a bilateral and OTC basis.

Securities Lender’s Perspective

The first steps in being able ...