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OVERVIEW
COURSE SYLLABUS
COURSE DETAILS
TEST YOUR KNOWLEDGE
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:
- Have a strong grasp of the fundamentals of Securities Lending & Borrowing (SLB) and be able to explain the transaction lifecycle
- Describe the types of market participants and appreciate why these firms engage in SLB, and their impact on capital markets and retail investors
- Understand the operational, legal and regulatory risks and issues involved
- Comprehend the advantages/disadvantages of using different types of collateral
- Appreciate the impact that corporate actions have on the lent security and on securities collateral
- Discover some relevant anecdotes and SLB case studies
Describe the types of market participants and appreciate why these firms engage in SLB, and their impact on capital markets and retail investors
Understand the operational, legal and regulatory risks and issues involved
Comprehend the advantages/disadvantages of using different types of collateral
Appreciate the impact that corporate actions have on the lent security and on securities collateral
Discover some relevant anecdotes and SLB case studies
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
David Rosenthal
Gail Rolland
Mike Simmons
The course content is divided into several topic areas, which are then broken down into multiple subtopics:
- Securities Lending & Borrowing (SLB) – The Fundamentals
- What is Securities Lending?
- The Purpose: Why Do Lenders Lend & Borrowers Borrow?
- Participants & Structure
- Trading Strategies
- Examples
- SLB Trade Lifecycle - An Overview
- Short Selling, Naked Short Selling
- Locates, Trade Execution & Fails
- Margin
- Corporate Events
- Billing
- The Marketplace – Participants & Stakeholders
- Lenders, Borrowers and Intermediaries
- Examples
- The Lender’s Perspective: Motivations and Considerations
- The Borrower’s Perspective: Motivations and Considerations
- Global custodians
- Third-party lending agents
- Central counterparties
- Anecdotes
- SLB Trade Lifecycle
- Pre-trading, Locates
- Trade execution
- Pre-settlement
- Settlement
- Buy-ins
- Mark to Market
- Margin calls
- Recall/return of lent settlements
- Fees & Billing
- Assets & Collateral
- Equity vs Fixed Income
- Fundamental collateral concepts
- Margin: Purpose & use
- Types of collateral
- Rehypothecation
- Legal Documentation
- GMSLA
- Securities lending agency agreement
- GMRA
- Updating Books & Records
- Securities bookkeeping: Definition & purpose
- Importance of updating books & records
- Updating books and records for lent/borrowed securities, cash and non-cash collateral, fees and rebates
- SLB and Corporate Actions
- Corporate actions: Overview
- Income
- Cash dividends
- Lent securities
- Short sale proceeds
- Lent/borrowed equity
- Voting
- Withholding tax
- Risks in Securities Lending & Borrowing
- Market Risk
- Credit Risk
- Operational Risk
- Legal Risk
- Reputational Risk
- Regulation
- Introduction
- EU short selling & financial transactions tax
- CSDR
- Reporting to a central trade repository
- Recent SLB Scandals & Controversies
- The Lehman saga uncovered
Securities Lending & Borrowing (SLB) – The Fundamentals
What is Securities Lending?
The Purpose: Why Do Lenders Lend & Borrowers Borrow?
Participants & Structure
Trading Strategies
Examples
SLB Trade Lifecycle - An Overview
Short Selling, Naked Short Selling
Locates, Trade Execution & Fails
Margin
Corporate Events
Billing
The Marketplace – Participants & Stakeholders
Lenders, Borrowers and Intermediaries
Examples
The Lender’s Perspective: Motivations and Considerations
The Borrower’s Perspective: Motivations and Considerations
Global custodians
Third-party lending agents
Central counterparties
Anecdotes
SLB Trade Lifecycle
Pre-trading, Locates
Trade execution
Pre-settlement
Settlement
Buy-ins
Mark to Market
Margin calls
Recall/return of lent settlements
Fees & Billing
Assets & Collateral
Equity vs Fixed Income
Fundamental collateral concepts
Margin: Purpose & use
Types of collateral
Rehypothecation
Legal Documentation
GMSLA
Securities lending agency agreement
GMRA
Updating Books & Records
Securities bookkeeping: Definition & purpose
Importance of updating books & records
Updating books and records for lent/borrowed securities, cash and non-cash collateral, fees and rebates
SLB and Corporate Actions
Corporate actions: Overview
Income
*Cash dividends
*Lent securities
*Short sale proceeds
*Lent/borrowed equity
Voting
Withholding tax
Risks in Securities Lending & Borrowing
Market Risk
Credit Risk
Operational Risk
Legal Risk
Reputational Risk
Regulation
Introduction
EU short selling & financial transactions tax
CSDR
Reporting to a central trade repository
Recent SLB Scandals & Controversies
The Lehman saga uncover
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: June 3, 4, 10, 11
10.00-13.30 CEST | Time Zone Converter
Livestreamed course fees
Members: EUR 1,650 + VAT (if applicable)
Non-members: EUR 2,050 + VAT (if applicable)
For security reasons, delegates who have not registered in advance will not be admitted to the live sessions.
Please note:
- All payments must be made in Euro.
- Invoices for single registrations are subject to an additional Euro 50 to cover administration costs*. No administration fee applies for invoices covering two or more registrations.
Contact
Should you have any queries, please contact education@icmagroup.org.
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