Securities Lending Agreement Traduction
A short sale includes the sale and redemption of borrowed securities. The goal is to sell the securities at a higher price and then buy them back at a lower price. These transactions occur when the borrower believes that the price of the securities is about to fall, which allows him to obtain a profit based on the difference in selling and buying prices. Regardless of the amount of profit, the borrower earns money on the short sale and the fees agreed at the credit intermediation are due at the end of the term of the contract. According to FDIC rules, borrowers should provide at least 100% of the value of the security as collateral. Guarantees on securities also depend on their volatility. The minimum initial guarantee for securities loans is equal to or greater than 102% of the market value of the securities lent, plus all accrued interest. Suppose an investor thinks the price of a stock will drop by $100 to $75 in the near future. The stock is not very volatile and is usually traded in defined areas. To benefit from her final thesis, she borrowed 50 shares of the company from an investment firm by establishing a cash guarantee of 5000 $US. The investor buys back the shares at a reduced price after the share price has fallen to the expected price and receives from the lender a credit discount on shares.
Securities lending is also involved in hedging, arbitrage and fails-driven borrowing. In all these scenarios, the advantage for the investment giver is either to obtain a low return on the securities currently held in its portfolio, or to possibly cover the financing requirement in cash. With the transfer of collateral under the credit agreement, all rights are transferred to the borrower. These include voting rights, the right to dividends and rights to other distributions. Often, the borrower returns payments corresponding to dividends and other returns to the lender. Securities lending is important for short selling, where an investor lends securities to sell immediately. The borrower hopes to take advantage of the sale of the security and buy it back later at a lower price.. .