xCube - Securities Lending and Borrowing (SLB)

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What is Securities Lending and Borrowing (SLB)?

Investors often have securities in their portfolios with the goal of maximizing their returns. Through SLB services, they can lend these securities to others in exchange for monthly earnings.

Borrowers, such as short sellers and other market participants, need access to specific securities. They borrow these securities to leverage profit opportunities, execute arbitrage strategies, and implement hedging techniques for a daily fee.

Benefits for Lenders

Maximize Returns

Receive monthly earnings directly into your account with minimal effort.

Convenience

Activating stock lending is automatic once you have a margin account.

Ownership

Access to sell your securities at any time even if your securities are lent out.

Benefits for Borrowers

Ease of Access

Accessing the stocks you require for your strategies is made simple and efficient.

Fully Automated

Activating stock Borrowing is automatic once you have a margin account.

Empowerment

Leverage securities to enhance your ability to capitalize on market conditions.

How does it work?

For lenders, all the securities you hold in a margin account at xCube are automatically opted in to participate in the automated SLB. You will receive a credit in your account at the end of each calendar month that your securities were lent during that month. You retain full access to your securities to sell at any time and you retain all the financial benefits, including dividends, while participating in this program.

For borrowers, initiate a short-sell order, and we'll swiftly verify the security's availability from our pool of lenders. Our system facilitates seamless matching of lenders and borrowers, ensuring smooth transaction execution. Borrowers are subject to daily fees, while lenders will receive monthly payments.

A Bit of Background:

Securities Lending and Borrowing (SLB) is a pivotal tool not only for emerging financial markets but also for those that are well-established. It enhances the process of price discovery, enables traders to engage in strategies on both the bullish and bearish sides of the market, and promotes liquidity through the facilitation of short selling. This latter feature is particularly important for correcting markets that may be skewed by excessive optimism.

In the global arena, countries such as the United States, United Kingdom, Japan, and Germany have recognized the value of SLB and incorporated it into their financial infrastructure. For instance, in the United States, major stock exchanges such as the NYSE and NASDAQ are key venues for securities lending activities. Across the Atlantic, the London Stock Exchange positions the UK as a leader in the European market, drawing on its international acclaim. Meanwhile, in Asia, the Tokyo Stock Exchange in Japan showcases a robust SLB framework.

The adoption of SLB across these key financial centers underscores its crucial role in fostering a more dynamic, equitable, and sophisticated trading landscape.

Frequently Asked Questions

SLB stands for Security Lending and Borrowing, a well-established practice in global financial markets where investors lend their securities holdings to others in return for a fee.
It enables short sellers and other market participants to access securities for various purposes.

The benefits for lenders include additional income, retention of all the main benefits of ownership, automated convenience, and the ability to sell the security anytime.

Borrowers gain expanded access to a wide array of stocks and securities for various purposes, such as short selling and hedging, with a streamlined process, and seamless integration for easy portfolio and risk management.

No, you can’t choose to only make certain stocks/ETFs available for lending. When you activate your margin account, all eligible stocks/ETFs in your account become available for lending.

Automatically when you upgrade your account to a margin account, you activate the stock lending feature. You can opt to unsubscribe by sending an email to support@xcube.ae