Securities Lending

A basic right...

You have the right to lend out any asset you own, including the securities in your portfolio. However, for decades this practice, known as securities lending, has largely been restricted to institutional investors who have reaped the rewards.

Whether you were given the opportunity to enjoy this additional revenue stream, or you decided not to engage in it due to the lack of control and transparency over your portfolio, we have a solution for you! Now you too can earn additional revenue by lending out the securities you already own.

Securities lending is a pure alpha solution which can help you Enhance returns Increase revenue Offset costs

A brief history of securities lending

The 1960s

Institutions who provide “market making” services are required to buy and sell securities at any time. Sometimes a market maker may not hold enough of a security at the time when a client wishes to sell it. This requirement was what lead to the first securities lending transaction.

The 1970s

In the 1970s, US custodian banks began lending specific securities to broker-dealers on behalf of their clients.

The 1980s

In the 1980s securities lending was adopted by many institutional investors as a way to offset custody fees. Wider adoption was aided by legislative changes and standardization.

The 1990s

Many regulators sought to address the legal, regulatory and tax impediments to securities lending. As authorities reduced the scope for activities such as tax arbitrage, hedging became the main demand driver of the industry.

The 2000s

During the 2000s and following increased adoption and standardization, specialist providers of securities lending services known as agent lenders began facilitating securities lending transactions.

In 2017

Sharegain reinvented the agent lender model, creating the world’s first Digital Agent Lender, opening up securities lending for all investors and making it accessible by focusing on simplicity, automation, and seamless integration.

The value of securities lending

As part of our mission to demystify the securities lending industry we want all of our clients to understand what drives the hidden value of their portfolio. Broadly, revenues from securities lending are driven by four main pillars.

Specials

These are usually hard to borrow securities which borrowers are willing to pay >1% for.

Corporate events

Corporate events create trading opportunities increasing the demand to borrow.

Term lending

Borrowers are willing to pay more to lenders who forgo the right to recall.

General collateral

These securities generate lower returns but can be lucrative in volume.

At Sharegain we focus on the returns that can be generated from the special portion of your portfolio. This is because specials provide the most attractive risk/return.

The smart way to lend

Before Sharegain, the securities lending industry was a black box that offered little transparency or control. Now, you can get a fully automated program up and running without massive overhead costs or effort.

Set your lending limits on each of your securities or at a portfolio level.

Manage your borrowers.

Choose to only lend your most lucrative securities.

Get real-time access to the lending rates on your securities.

Allow your whole team access for effective oversight of the lending activity.

Approve each of your loans individually.

Time is your most valuable commodity. Define and set your own control framework and let our tech work for you.