Global Securities Lending
Clients can realize incremental income on assets in their portfolios by lending their securities to qualified borrowers. This strategy can offset custody costs and other administrative expenses, as well as increase the total return of the portfolio – without affecting the investment managers’ trading activity.
What determines the amount of securities lending revenue?
- Size and composition of the portfolio.
- Borrower and collateral restrictions.
- The unique characteristics of securities (e.g. “hot" securities such as equities with large short positions or relatively small floats will generate higher revenue).
- The country of issue (e.g. international lending typically has fewer loans, but higher fees).
Our lending program
Combined with the experience of our parent organizations, CIBC Mellon has been a respected participant in the global securities lending market since 1985. As Canada’s leading securities lending agent, we provide borrowers from around the world with “one-stop shopping” for their securities lending needs.
As an agent, CIBC Mellon:
- Selects borrowers by applying stringent credit guidelines.
- Negotiates rates.
- Monitors loans.
- Provides daily mark-to-market evaluation to ensure adequate collateral coverage.
- Collects fees from borrowers.
- Monitors client accounts for sale activities.
- Provides clients with reporting on outstanding loans and revenue earnings on portfolios.
- Absorbs all infrastructure costs associated with the lending program.
Third party securities lending
CIBC Mellon’s award-winning securities lending program is your opportunity to realise significant alpha quickly and efficiently. Our unique program is structured such to allow any institutional investor access to the same industry-leading technology and resources available to our custody clients.
We provide reports to our securities lending clients in an easy to read format, with detail and summary information such as:
- Name and amount of the security loaned (broken down by security classification).
- Name of borrower.
- Amount of time the loan has been outstanding.
- Income earned and received.
- Credit quality.
- Average maturity.
We also provide clients with our monthly commentary on the global securities lending marketplace. It includes analysis of market trends by sector, assessment of significant economic events, high-profile mergers and acquisitions and other capital stock activity from a securities lending perspective.