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Securities Lending

66 Pages Posted: 31 Mar 2012  

Paul Lipson

affiliation not provided to SSRN

Bradley K. Sabel

Shearman & Sterling LLP

Frank M. Keane

Federal Reserve Banks - Federal Reserve Bank of New York

Date Written: March 1, 2012

Abstract

This paper, originally released in August 1989 as part of a Federal Reserve Bank of New York series on the U.S. securities markets, examines loans of Treasury and agency securities in the domestic market. It highlights some important institutional characteristics of securities loan transactions, in particular the common use of agents to arrange the terms of the loans. While we note that this characteristic sets securities lending apart from most repurchase agreement (repo) transactions, which occur bilaterally between a borrower and a lender, we observe that repo and securities loan transactions ultimately serve the same important economic purpose — to cover short positions used for hedging or arbitrage in related cash markets. The data used here, though largely informal, were provided by knowledgeable market participants.

Keywords: securities lending, repo

JEL Classification: G10, G19, G20

Suggested Citation

Lipson, Paul and Sabel, Bradley K. and Keane, Frank M., Securities Lending (March 1, 2012). FRB of New York Staff Report No. 555. Available at SSRN: https://ssrn.com/abstract=2030418 or http://dx.doi.org/10.2139/ssrn.2030418

Paul Lipson

affiliation not provided to SSRN ( email )

Bradley K. Sabel

Shearman & Sterling LLP ( email )

599 Lexington Avenue
New York, NY 10022
United States

Frank M. Keane (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
(212) 720-6079 (Phone)
(212) 720-1941 (Fax)

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