Short selling is not just about directional short selling. It plays an integral part of a broader investment strategy. It strengthens markets, adding liquidity and price discovery to capital markets.
Now, what happens if you lent your shares, and they have significantly fallen in price? Ask yourself; did they fall in price because you lent them to short-sellers or because those short sellers spotted a problem with the company that sadly transpired? Short-sellers may be right or wrong, and it is up to you to decide whether you think the shares are properly priced. However, wouldn’t you want to know there is a short selling activity in your shares at the time it’s actually happening, while earning rent for it, rather than reading about it retrospectively and earning nothing for it? The biggest financial institutions operate like that and have been lending securities for decades, making billions of dollars from this common practice.
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With securities lending, as with other investment activities, your capital may be at risk.
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*This website is directed exclusively at and intended to be used only by professional investors and retail investors with direct holdings in stocks, bonds and ETFs in excess of £500,000. Our website is not directed at any person or institution where (by reason of nationality, residence or otherwise) the availability of our website or securities lending in general is prohibited. The material on this website is for general information and should not be considered as investment advice or solicitation to be involved in securities lending or to use one of Sharegain’s services. Securities lending involves risks and we have not and will not assess whether our service is appropriate for you. If you decide to lend your securities, your capital may be at risk. Please consult professional advisors if you are in any doubt as to whether the service would be beneficial for you or whether you require any consent or need to observe any formalities, before deciding to engage in securities lending.
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