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Securities lending trading strategies

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securities lending trading strategies

As an independent third party agent, eSecLending delivers tailored securities lending solutions which produce higher returns with greater transparency and trading client service when compared to the securities lending programs offered by traditional lending agents. We manage individual programs for each of our clients built around their unique needs and goals, which differs from the pooled structures offered by other lending agents in the market. Using our proprietary auction process, we solicit guaranteed bids from potential borrowers to strategies the optimal route-to-market combination of exclusive and discretionary strategies. In addition to being a trading tool, the securities process provides lenders with price transparency, enhanced risk management, and proof statements for fund boards and auditors alike. The auction provides clients with premium returns by exploiting the inefficiency of borrower pricing on lending transactions. The auction is a price discovery tool that delivers greater returns and facilitates informed decision making on the lending execution strategy that is best for each portfolio or subset of securities portfolio. The lending execution strategies chosen post-auction therefore represent the optimal combination of agency strategies and discretionary lending awards based upon the lending auction results. The securities create an audit friendly proof statement for management and boards of directors to substantiate why lending decisions were made in the best interest of beneficiaries. In the event of a counterparty insolvency, eSecLending provides indemnification supported by an insurance policy issued by highly rated, independent insurance companies. Collateral management is used to mitigate counterparty risk and improve program performance by adapting to regulatory-driven, borrower demand. This enables clients to customize their lending schedule to support their specific risk management tolerances. Lending increasing focus on the regulatory cost of business, collateral flexibility is a valuable tool in enabling lenders to react to borrower demand and trading program performance. ROUTES-TO-MARKET strategies typically implements both agency exclusive and discretionary lending strategies to optimize returns for our clients. AUCTION PROCESS The auction provides clients with premium returns by exploiting the inefficiency of borrower pricing on lending transactions. Trading is Securities Lending? Securities lending is an investment strategy in which beneficial owners of securities temporarily lend their assets securities approved borrowers for a fee. Loans are made on a collateralized basis, with a collateral margin of typically 2 percent to 5 percent Does the Lender Retain Economic Benefits? In a lending lending, the lender retains all economic benefits of lent securities, including dividend and corporate action entitlement How are Loans Made? Securities lending loans are either made on a callable basis open loan or for a fixed date in the future How Big is the Securities Lending Market? Datalend as trading March Who Lends? Sovereign wealth funds, central banks, mutual funds, public and private pension funds, endowments and foundations, insurance companies and ETFs Why Lend? To generate incremental portfolio return, to offset expenses associated with managing a portfolio, to generate liquidity Who Borrows? Banks, broker-dealers and hedge funds Why Borrow? To prevent fails upon trade settlement, market-making activities, facilitate arbitrage strategies, cover short trade execution as well strategies enter into financing and balance sheet management purposes Who Facilitates the Transactions? A securities lending agent, either a third party provider or custodian bank What Securities are Lent? Global equities, sovereign bonds, corporate bonds, emerging market bonds, U. Cash, main index equities, sovereign bonds, corporate bonds and ETFs. securities lending trading strategies

5 thoughts on “Securities lending trading strategies”

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