Stock Lending Agreements

The income from the reinvested cash guarantees is distributed by paying a discount to the borrower and then dividing the remaining amount between the security holder and the agent bank. This allows large investment funds to earn additional income on their portfolios. If the lender is a retirement plan, the transaction may have to comply with various exceptions under the Employeee Retirement Income Security Act 1974 (ERISA). [6] SBL also offers a number of benefits to the lender. It offers an additional and lucrative revenue stream with no additional risk. The liquidity of the securities used as collateral and the existing relationships – with generally high net worth individuals (HWNIs) and/or shareholders of listed companies that use the SBL facility – also reduce much of the credit risk associated with traditional credit. NO, it is a non-recourse loan; the lender cannot come after you personally. There is NO personal liability related to equity credit. The only collateral for the loan is the stock guarantee and the lender`s only recourse is against the action. You have no personal responsibility. No guarantees. Securities lending: the lending of a share, derivative or other security to an investor or company.

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