Stock Lending and Short Sales

What this video covers

• How a stock loan temporarily transfers securities through lender, borrower, and return of equivalent securities, with collateral backing the entire transaction
• The three-step stock loan flow and why stock lending is the operational link that makes short sale delivery possible
• Why a member must determine whether a non-member counterparty acts as principal or agent, and the triplicate recordkeeping required for agent relationships
• How liquidation rights differ across member-to-member agreements, non-member written agreements, and customer advance notice requirements
• The locate requirement timing: why the borrowing basis must be established before accepting or effecting the short sale, never after
• The three ways to satisfy a locate (actual borrow, bona fide arrangement to borrow, or reasonable grounds for timely borrowing) and why documented compliance is mandatory
• The advance written notice required before first borrowing a customer's fully paid or excess margin securities, including the specific three disclosures that make the notice valid