Contact Us
 Key People
 Members
 Directory of
 Associate Members
 Membership
 - application
 - benefits & criteria
 - fees
 Industry
 Documentation
 ISLA Best
 Practices
 Securities Lending
 Fundamentals
 Securities Lending
 And Corporate
 Governance
 An Introduction To
 Securities Lending
Member Login
What is securities lending?

Securities lending is the temporary transfer of a security by its owner to another investor or financial intermediary. Once the securities have settled, the title and voting rights are transferred to the borrower, who can sell or re-lend the borrowed securities during the life of the loan. In return, the borrower agrees to return the loaned securities, secure the loan with collateral of equal or greater value than the loaned securities, and pay any user fees (implicit or explicit), and remit to the lender any dividends, coupon interest or other distributions that occur during the time the securities are on loan.

Who participates in Securities Lending?

Borrowers - These will typically be Investment Banks, broker/dealers, intermediaries or Hedge Funds.

Lenders - with assets in the form of equities and fixed income securities, will most commonly participate in the market in one of two ways, either directly or indirectly through an agent.

Direct Lenders - tend to be large institutional investors such as Pension Plans, Insurance and Life Companies.

Agent Lenders - will act for any beneficial owner regardless of size, but where the beneficial owner does not wish to, for reasons of cost or size, participate directly. Agent Lenders will tend to be Global Custodians or Asset Managers participating on behalf of a large number of clients.

How is Securities Lending regulated?

Securities lending is a regulated activity and as such is governed by the relevant laws, regulations and statutes that apply in the countries where the borrower and lender are resident. Many participants in securities lending also adhere to a recognised code of practice, the Stock Borrowing and Lending Code of Guidance which is published by the UK Stock Lending and Repo Committee, an industry body chaired by the Bank of England. Other countries have developed similar codes of practice.

A more comprehensive guide to securities lending can be found in 'An Introduction to Securities Lending' a publication commissioned by ISLA, the Bank of England, the British Banker's Association, The London Stock Exchange and The London Investment Banking Association. This document can be found by following the link of the same name, on the left hand menu.
News Headlines more>
Independent academic research indicates lack of impact of short selling restrictions globally
17 Dec '08
ISLA Elects new Board and plans affiliation to SIFMA
01 Oct '08
ISLA RMA SIFMA ASLA PASLA Joint Statement to support equity market liquidity
26 Sep '08
ISLA comments on temporary prohibition of new short positions in financial stocks
19 Sep '08
ISLA issues model for agent lender disclosure in Europe
15 Jul '08
ISLA welcomes ruling in Beconwood vs ANZ
02 May '08
ISLA publishes interim recommendations for agent lender disclosure in Europe
30 Nov '07
Current Issues more>
Securities lending and short selling - Update
Jun '08
Why asset management arms of banks should continue to lend bank shares
Jun '08
ISLA consults on revised GMSLA
May '08
ISLA guidance on outstanding loans of former Northern Rock shares
Mar '08
French trade date recommendation
Dec '07
ISLA response to Independent article
Nov '07
ISLA Consultation on Proposed Changes to the GMSLA
Jul '07
ISLA response to FT article
Jun '07
Events more>
Professional Repo and Collateral Management course with Securities Lending Workshop
24-26 March 2009
Euroclear
Brussels
Belgium

ISLA/RMA Conference 2009
23-25 June 2009
Hotel Arts
Barcelona, Spain
International Securities Lending Association - Securities Lending Fundamentals