Securities Lending & Borrowing - Operational Challenges
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Securities Lending & Borrowing: Operational Challenges - Livestreamed format
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OVERVIEW
COURSE SYLLABUS
COURSE DETAILS
Securities Lending & Borrowing has been an important activity within the securities marketplace for many years. Firms that choose to lend their equities and/or bonds do so in order to earn lending fees and to enhance their investment returns. Conversely, firms that choose to borrow securities typically do so primarily to meet delivery commitments and to receive sale proceeds in a timely fashion.
However, undertaking securities lending & borrowing transactions is not without risk. The mitigation of exposures is an essential daily task, involving the regular revaluation of both the lent/borrowed security and the associated collateral. Companies are also required to make margin calls on the counterparty and settlement of such margin calls.
Additionally, corporate actions may arise which can impact the lent security and/or securities collateral.
It is therefore of paramount importance that those responsible for processing such transactions possess a clear understanding of the risks involved, their potential exposures and critically, what mitigating measures are necessary.
Course Outcomes
By completing the course you will be able to:
Who should attend?
The course is suitable for personnel working within many departments of financial institutions such as operations, middle office, risk, legal, accounting and IT. The course is applicable to buy and sell-side firms, plus those working within central securities depositories and custodians.
The course is targeted towards those currently working within a securities lending department who would benefit from an all-round understanding of the topic. In addition, those who have had limited exposure to the topic but who require a greater understanding of the relationships between their work and securities lending & borrowing.
Course Trainer
Gail Rolland
Mike Simmons
However, undertaking securities lending & borrowing transactions is not without risk. The mitigation of exposures is an essential daily task, involving the regular revaluation of both the lent/borrowed security and the associated collateral. Companies are also required to make margin calls on the counterparty and settlement of such margin calls.
Additionally, corporate actions may arise which can impact the lent security and/or securities collateral.
It is therefore of paramount importance that those responsible for processing such transactions possess a clear understanding of the risks involved, their potential exposures and critically, what mitigating measures are necessary.
Course Outcomes
By completing the course you will be able to:
- Appreciate why firms engage in securities lending & borrowing
- Understand the primary content of securities lending legal agreements and how firms are impacted operationally
- Identify the operational level risks and best practice mitigation methods
- Comprehend the advantages/disadvantages of using different types of collateral
- Understand each step in the trade and collateral lifecycle
- Appreciate the impact that corporate actions have on the lent security and on securities collateral
Who should attend?
The course is suitable for personnel working within many departments of financial institutions such as operations, middle office, risk, legal, accounting and IT. The course is applicable to buy and sell-side firms, plus those working within central securities depositories and custodians.
The course is targeted towards those currently working within a securities lending department who would benefit from an all-round understanding of the topic. In addition, those who have had limited exposure to the topic but who require a greater understanding of the relationships between their work and securities lending & borrowing.
Course Trainer
Gail Rolland
Mike Simmons
The course content is divided into several topic areas, which are then broken down into multiple subtopics:
If you are taking the livestreamed course, you have six months to study the material.
If you’re taking the classroom-based course, the training is delivered on two consecutive days between Monday and Friday.
Please note:
Please bring to the course a normal/standard calculator that is capable of accepting at least 12 digits (e.g. 999,999,999.99); examples of such calculators are the Office Depot AT-814 and the Canon LS-123K.
- Fundamental Securities Lending & Borrowing Concepts
- Securities Lending & Borrowing Trade Lifecycle - An Overview
Legal documentation
Trade execution
Opening & closing leg settlement
Exposure calculation
Margin calls
Recall/return of lent settlements
Settlement of fees
- Securities Lending & Borrowing Marketplace Participants
Lenders, Borrowers and Intermediaries
The Lender’s Perspective: Motivations and Considerations
The Borrower’s Perspective: Motivations and Considerations
- Legal Documentation
The GMSLA
Securities lending agency agreement
The GMRA
- Characteristics of the Lent/Borrowed Security
Equity vs Bond
- Securities Lending & Borrowing and Associated Collateral
Fundamental collateral concepts
Margin: Purpose & use
Types of collateral
Collateral and SL&B Fees
- The Securities Lending & Borrowing Trade Lifecycle
Pre-trading
Trade execution
Pre-settlement
Settlement of opening leg
Throughout lifetime of trade
Settlement of closing leg
Settlement of fees
- Updating Books & Records
Securities bookkeeping: Definition & purpose
Essential securities bookkeeping concepts
Importance of updating books & records
Updating books and records for lent/borrowed securities, non-cash securities, cash collateral, fees and rebates
- Accessing the Securities Lending & Borrowing Marketplace
Bilateral lending & borrowing
ICSD’s: Failed trades management
ICSD’s: Tri-party agent
Global custodians
Third-party lending agents
Central counterparties
- Securities Lending & Borrowing and Corporate Actions
Corporate actions lifecycles: Overview
Treatment of income: Cash dividends
Entitlement to income on lent securities
Treatment of income
Short selling of equity
Lent/borrowed equity
Equity collateral
Lent bonds & bond collateral
Treatment of voting rights
Treatment of withholding tax
- Regulation
Introduction
EU financial transactions tax
Reporting to a central trade repository
- Risks in Securities Lending & Borrowing from the Lender's and the Borrower's Perspective
Course Delivery
If you are taking the livestreamed course, you have six months to study the material.
If you’re taking the classroom-based course, the training is delivered on two consecutive days between Monday and Friday.
Please note:
Please bring to the course a normal/standard calculator that is capable of accepting at least 12 digits (e.g. 999,999,999.99); examples of such calculators are the Office Depot AT-814 and the Canon LS-123K.
Livestreamed Course
ICMA courses are delivered via video conferencing accessed on our digital learning platform, using the most effective pedagogical approaches and incorporating interactive functions like virtual breakout rooms.
The Securities Lending & Borrowing: Operational Challenges live sessions are delivered in four 3.5 hour sessions over the course of two weeks. You will be given access to the course materials before the live sessions, and will have access to those for a total of six months. During these six months you will have the option to keep working through the course materials at your own pace.
Live sessions: September 24-25, October 1-2
10.00-13.30 CET | 09.00-12.30 GMT
Livestreamed course fees
Members: EUR 1,650 + VAT (if applicable)
Non-members: EUR 2,050 + VAT (if applicable)
Costs include full access to the online campus, associated learning materials and the examination fee. Please note that payment must be received before the start of the course.
Contact
Should you have any queries, please contact education@icmagroup.org.
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