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what is securities lending?

April 26, 2017lending securities

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what is securities lending?

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Most Investment Banks have a trading desk that is called the Securities Lending desk (“Sec Lending”) They borrow securities from customers for use as collateral in repurchase agreements and other transactions and pay the owner of the security a fee for lending the securities. If the transaction is a repurchase agreement (“repo”) the sec lending desk receives cash for the securities and lends the cash in the money market to earn interest. This cash is a big source of liquidity in the money market.