This section of our website outlines how the securities lending business works
and suggests generally what is required to start and operate a desk. The tab is addressed to novice users, to people who are just beginning to think about setting up a securities lending operation. Some of the information that follows has appeared in Power Point presentations, lectures and training sessions given by John Piccitto, but some of it has been developed uniquely for this website, and will be updated periodically. To find out more about the subject of securities lending, please contact us using the email button above, or phone our offices
at +44 (0)1372 210 915.
INTRODUCTION
Setting up a Stock Loan desk is neither a difficult nor a lengthy task for those with a specific idea of what they want and how to go about getting it. The securities lending business can produce low-risk profits by putting to work otherwise unused assets in a fully collateralized, controllable way.
Historically, Securities Lending began as a program to cover fails, but now it also supports modern trading strategies, such as arbitrage and other transactions used by hedge funds. The current level of international securities lending has been estimated to be in excess of €7 trillion. International securities account for approximately €2.6 trillion (or about 37%), while US equity and fixed-income issues account for the rest. It has also been calculated that the average income earned on equity positions is 44 basis points, while fixed-income positions tend to yield approximately 12.2 basis points, with an average loan of securities remaining outstanding for 122 days. Average income per transactions can be
calculated from these figures.
