Frequently Asked Questions
What are the associated risks?
Securities lending, like all market activities, creates a risk/reward trade-off for the lender, borrower and agent lender. The primary risks are:
Borrower/counterparty default: Capital strength and effective collateral management are essential to managing potential default risk. Sharegain only lends to top tier banks, supported by the over-collateralisation of loans (marked-to-market daily at an average 105%), meaning much of the risk is mitigated by the contractual obligations each loan is governed by.
Operational: We manage this through a robust operating framework, integration with global leaders in the post-trade space and a comprehensive understanding of transactional flows and lifecycle management.
Cash collateral reinvestment: Sharegain operates a non-cash collateral lending solution exclusively – ensuring this commonly referenced risk is absent altogether.