Template:Securities lending capsule: Difference between revisions

Under a '''[[securities loan]]''' or '''[[stock loan]]''',<ref>in EU speak, “[[securities or commodities lending and securities or commodities borrowing]]”. Elegant, huh?</ref> a “{{gmslaprov|lender}}” transfers [[securities]] to a “{{gmslaprov|borrower}}” in return for the {{gmslaprov|borrower}}’s promise to return [[equivalent]] {{gmslaprov|securities}} to the {{gmslaprov|lender}} in the future.<ref>It may be at an agreed date, or on the {{gmslaprov|lender}}’s request, or at the {{gmslaprov|borrower}}’s option.</ref> In return, the {{gmslaprov|borrower}} provides agreed collateral to the {{gmslaprov|lender}} equal to the value of the {{gmslaprov|borrowed securities}}. If the value of the {{gmslaprov|borrowed securities}} rises, the {{gmslaprov|borrower}} must provide more {{gmslaprov|collateral}} (and if it falls, the {{gmslaprov|borrower}} may ask for some of the {{gmslaprov|collateral}} back). The [[lender]] keeps market exposure to the the {{gmslaprov|borrowed securities}} at all times: the {{gmslaprov|borrower}} only has to return what it has borrowed, even if it has fallen in value. Therefore, [[stock loan]]s are used to [[Short selling|short-sell]] securities. <br>