Comments on: Starting Out in Securities Lending https://www.interactivebrokers.com/campus/podcasts/cents-of-security/starting-out-in-securities-lending/ Financial Education from Interactive Brokers Mon, 12 Aug 2024 19:13:11 +0000 hourly 1 https://wordpress.org/?v=6.6.2 By: Interactive Brokers https://www.interactivebrokers.com/campus/podcasts/cents-of-security/starting-out-in-securities-lending/#comment-243087 Wed, 31 Jul 2024 16:16:04 +0000 https://ibkrcampus.com/?p=209684#comment-243087 In reply to Anonymous.

Thanks for engaging!

]]> By: David Merkel https://www.interactivebrokers.com/campus/podcasts/cents-of-security/starting-out-in-securities-lending/#comment-242699 Sat, 27 Jul 2024 02:22:01 +0000 https://ibkrcampus.com/?p=209684#comment-242699 Good article. Let me tell you an odd story. In late 2002, I was managing bonds with Fidelity and Guaranty Life as the client. F&G came to me and said “Please pull in all the sec lending by year end to make our balance sheet look better.” I told them we would do it, notified the appropriate parties, and in three days (T+3) all of the loans were called in except one. It was an small deal ABS that had weird collateral (can’t remember what it was) and we owned a portion of the most senior slice. As far as I could tell, it traded rarely if ever, which is true of most ABS. After checking with my colleagues, I called the custodian, asking what was going on. They told me that the one they lent it to refuses to return it. I asked them who it was and they would not tell me. I told them to order them to buy in the short and give us back our bonds. They said they were trying to do just that. After a week or so, the security was still not returned, and I called the custodian back, and got the same reply. So I asked him, ”Don’t you have a legal obligation to get it back to us?” They told me no. I again asked who the borrower was, and was refused. I went talk to F&G’s legal counsel about suing the custodian, and like most life insurance company lawyers I have known, they did nothing. F&G management seemed to no longer care. The yearend passed and I just dropped the whole thing. By the time I took a new job in April 2003, the security was still loaned out. I have no idea what happened, but my best guess was some hedge fund had an esoteric trade on, and could not find anyone to sell them the security at all. They borrower had more influence over the custodian than we did.

]]> By: Anonymous https://www.interactivebrokers.com/campus/podcasts/cents-of-security/starting-out-in-securities-lending/#comment-242693 Fri, 26 Jul 2024 21:25:46 +0000 https://ibkrcampus.com/?p=209684#comment-242693 Thank you, very valuable.

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