O'Reilly logo

Key Financial Market Concepts, 2nd Edition by Bob Steiner

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Securities Lending/Borrowing

Definition

A securities lending transaction is a temporary transfer of legal title in a security from one party to another; the transaction is often collateralised by a matching temporary transfer of assets or cash in the opposite direction. Securities borrowing is the same transaction viewed from the counterparty’s point of view.

How is it used?

A dealer may sell a particular security which he does not already own. That is, he deliberately establishes a short position because he expects the price to fall so that he can buy the security back later for a profit. He must, however, deliver on the sale, even though he does not have the bond. If he does not deliver, the deal is not cancelled and he is still liable for ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required