Securities lending explained

General Collateral (GC)

A security is said to be General Collateral if it is generating a lending income of between 0 and 100 basis points.

Around 90% of all securities are GC, and GC securities make up most of the volume within the securities lending market. Securities lending transaction involving general collateral securities are characterised by low returns and high volumes.

For the most part, the main index securities, including those which make up the FTSE 100 and the S&P 500, will always be GC. The major driver for this is huge amounts of liquidity. However, there are exceptions to this rule, creating an opportunity for any lenders. (This opportunity should, of course, be assessed based on any inherent risk, as with all investment activities).

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