We will be lending your securities to a panel made up of some of the largest global banks.
Securities lending plays an important role in today’s global financial markets. Lenders tend to include pension funds, ETFs (or other investment funds) and online brokers, all of whom hold securities for the long term.
The majority of borrowers that utilise securities on loan are large financial institutions, including banks, broker-dealers, and hedge funds.
There are two main reasons to borrow securities:
1) Supporting efficient markets - some brokers and banks (known as market makers) support day-to-day trading on the London Stock Exchange and they will frequently borrow shares to be able to continuously quote two-way prices.
2) Trading strategies - some investment strategies involve selling shares or other securities ‘short’. A borrower may forecast that a security’s value will decrease and will attempt to profit from this change in price by borrowing the security, selling it on the market and (if the value does decrease) buying it back at a lower price in the future.