Securities Lending/Borrowing

Securities lending initially developed as a way of reducing costs resulting from failed deliveries and was often arranged on an informal basis between broker/dealers.

Today, the practice bears little resemblance to its origins and, in recent years, has attained greater visibility emerging as an increasingly vital component of the domestic and international securities markets. The steady growth of securities lending is a result of its pivotal role; improving efficiency, enhancing the liquidity of securities markets and supporting sophisticated trading and arbitrage strategies.

ObjectLab developed a comprehensive system to deal with Securities Lending/Borrowing. Developed for a German Bank it has been in use since 2002 and is now accessed globally. The system is a multi-region global database, multi-legal vehicle, front-to-back office distributed application. It offers the following main functionalities:

Trade capture and processing

  • Multiple asset class capability
  • Multiple currency capability
  • Easy and quick trade capture
  • Full product life-cycle support
  • Securities borrowing and lending transactions
  • Cash and securities collateral
  • Real-time Collateral Management with threshold & margin calls
  • Accrual calculation, tracking, billing generation and payment processing
  • Partial and full returns supported
  • Return allocation based on multiple allocation algorithms
  • Transaction closeout facility
  • Term trade support
  • Four-eyes authentication for ssi
  • Web interface for reports and file outputs
  • Real-time journal generation
  • Full back-dated transaction adjustment capability
  • Automatic interest rate re-fixing for indexed transactions
  • Multiple product types supported (for booking of collateral)
  • Configurable mark-to-market profile by party, asset class and market of issue
  • Configurable party profile for eligible securities and collateral
  • Fully or semi automatic mark-to-market processing
  • Processing of Euroclear auto-borrow loan file to closeout and create transactions automatically
  • Multiple accounting schemas supported
  • Real-time and reconciliation Interface to Summit
  • Real-time PDF confirmations faxed or emailed to clients
  • Multiple position reporting to Risk systems, the Bank's general ledger, Regulatory to BoE, etc.


  • Two-way real-time interface with GLOSS (first Gloss Bureau integration with ADP)
  • Swift generation
  • DVP/FOP settlement
  • Settlement suppression option.

Reference data

  • Relationship modelling and enforcement of margin, haircuts, confirmations
  • Role based security
  • Multiple pricing sources option
  • Web based user management
  • Automated daily import of asset data, depot data.

Support and maintenance

  • Real time error handling (email & sms)
  • Comprehensive error logging.
  • Comprehensive audit and statistics reporting.
  • Distributed application based on Open Source Technologies (JBoss, Tomcat, WebStart, Struts, jFreeChart, etc).

ObjectLab handled the full lifecycle of this application from the analysis, design, development as well as 24x5 support. Our team has acquired significant knowledge in the Securities Lending field (for more information about Stock Lending, we recommend the descriptions at the Australian Securities Lending association.)

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