Securities lending explained

Lending fee

In exchange for borrowing your securities, a borrower will pay you a lending fee.

The lending fee is the price of a loan and is typically quoted in basis points (bps) where 1% is equivalent to 100 bps. The industry generally categorises the available supply of lendable securities in 1 of 3 ways, which is ultimately dictated by the lending fee: General Collateral (or GC) = securities with a lending fee less than 100bps, Special = > 100bps and Deep Special = >400bps

Lending fees are dynamic and are driven by many factors. These factors ultimately influence price either by influencing the availability of lendable supply or the demand to borrow certain securities. As a consequence, something which is currently General Collateral can become Special tomorrow, and vice versa.

Sharegain seeks to focus on the returns that can be generated from the ‘special’ portion of a client’s portfolio. Whilst we’re of course able to lend GC securities, by focusing on specials we can minimise client’s exposure and therefore minimise risk, whilst optimising their returns.

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    With securities lending, as with other investment activities, your capital may be at risk.

    Sharegain Ltd. is registered in England and Wales (no. 09600298) and is authorised and regulated by the Financial Conduct Authority (no. 730395).
    *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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