Securities financing: Difference between revisions

* '''Shorting''': Stock lending done as a means to effecting an outright short position in a stock. Here you borrow the stock, immediately sell it, hope like made the price goes down, buy it back, and return it to the lender for profit. This is usually done by end users like hedge funds, and is done by means of:

** '''Swap hedge inventory''': sending out the swap dealers's hedge inventory, for synthetic prime brokerage. In practice these two uses are almost the same, and the broker/dealer will have an automated pipeline of assets into the triparty collateral management system so it can  manage this process on an industrial scale.

* Reuse: In a way, the act of rehypothecation or reuse is a sort of pre-collateralised securities loan, too, though it is better to think of it as a prelude to an inventory financing arrangement. Reuse is really just to convert a pledge arrangement into a title transfer one.

{{sa}}

*[[Stock loan]]