OVERVIEW:
Intensive and thorough overview of the securities finance business using trading software and covering: mechanics of securities lending and repo, alternative structures, the motivations and roles of market players, the main trading strategies driving demand for stock borrowing, risk and return, counterparty selection, lending options including auctions, online exchanges.
WHAT YOU WILL LEARN:
Day 1 answers the question: how does it work and why do people do it? We start with an overview, then look at the mechanics of securities lending, how trades are negotiated, effect of market movements, what happens when a dividend is paid.
The focus is on how the economic benefits of securities ownership are retained even as legal title is transferred. Using Personal Martini� on individual PCs, delegates play the role of lending intermediaries, borrowing and lending securities and spotting opportunities for matched book trades.
Next we focus on the financing transaction, be it equity repo, total return swaps or option combinations in the international market or "reverse stock loan" and other forms of financing in the US. The role of proprietary desks and hedge funds is highlighted as well as the business of prime brokerage.
Next we take a look at tax considerations and yield enhancement trades. Finally, we review the practicalities of setting up a lending programme, deciding among the available lending options, and developing collateral and counterparty guidelines.
Day 2 shows how alternative structures can be used for yield enhancement, then focuses on the borrower�s perspective. We examine the trading strategies that drive securities lending.
Then we look at collateral options and learn why borrowers reward lenders for collateral flexibility. Following an examination of risk in a securities lending programme and the protections offered by both documentation and technology, we finish up with a comparative review of the several electronic securities lending exchanges recently developed and the potential impact of these internet initiatives on the industry.
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