All About Securities Financing

40k/Securities financing

 

Securities financing occurs when one party lends the other securities against cash. It’s a type of business financing that is based on the buying and selling of securities.

“Securities” are items such as stocks, bonds, and other asset-based items. There are various types of securities financing transactions, such as securities loans, repurchase agreements, and sell-buybacks. At CreditHub, we can help you determine if securities financing is for you.

 

Why securities financing works:

  • It is an important factor in short selling, where an investor borrows securities to immediately sell them. The goal is to sell them at a high price and then quickly buy them back at a lower price. The lender then gets a portion of the profit, as well as their securities, back.
  • It is also important to:
    • Hedging
    • Arbitrage
    • Fails-driven borrowing

In these cases, the lender earns a small return on the securities in their portfolio, or to meet cash-funding needs.

 

How It Works:

Most of the time, securities financing is a broker-to-broker transaction, and not really intended for individual investors. Because it can very quickly lose transparency in its terms, organizations like the European Union have implemented various controls on security financing transactions, called SFTRs (security financing transaction regulations). This is in an attempt to maintain as much transparency around these transactions as possible, because they do not naturally tend towards such clarity.

 

At CreditHub, we’re here to assist you in the world of securities financing. Our top-notch advisors, tools, and the time-tested processes we have in place are all designed to serve you, our client, as we delve into the world of business financing and securities financing transactions. Your own personal advisor is armed with the experience and expertise it takes to make sure you get the best financing options possible. Contact us today to learn more about how we can help. We look forward to working with you.

Terms

5.35% (prime +2) 5 years

Funding Speed

30 days

Funding Range

$1,995