Interview questions for Securities Lending?

Hi WSO,

I have an interview coming up for an entry level Securities Lending - Prime Services position.

What interview questions should I expect in terms of technicals, stock pitches, fit questions etc.

How are the interviews for securities lending similar/different than a traditional S&T interview?

Any help from those in the industry would be much appreciated.

Thanks.

 
Best Response

know what short interest is, what % of mkt is short and the effect it has on stocks (i.e.if high short interest and earning outperfrom expect a strong uptick) , know why funds borrow stock (cheaper way of earning the return on the stock as you dont actually own it ), know how the process works (IB owns the stock can therefore lend it out and take make a small margin), flow arbirtage I think also comes into it (i.e. dividend tax arbirtage - bank has entities and platforms to get full dividend and provides this service for a fee to others), know who some of the big buyside players are - I'm no expert but that stikes me as the bare minimum you should know.

 

know what short interest is, what % of mkt is short and the effect it has on stocks (i.e.if high short interest and earning outperfrom expect a strong uptick) , know why funds borrow stock (cheaper way of earning the return on the stock as you dont actually own it ), know how the process works (IB owns the stock can therefore lend it out and take make a small margin), flow arbirtage I think also comes into it (i.e. dividend tax arbirtage - bank has entities and platforms to get full dividend and provides this service for a fee to others), know who some of the big buyside players are - I'm no expert but that stikes me as the bare minimum you should know.

 

DO NOT TAKE THIS JOB (unless you're unemployed with a family of 14 to feed and are broke on the streets)

This is an operations role within stock loan. If you enjoy operations, then by all means go ahead and do it. If this is going to be your first job, then try to find something better.

Every day you will be MTM'ing contracts, which entails balancing between subsidiaries and counterparties. You will then ensure that all corporate actions that come in are processed on securities that are currently being lent or borrowed. The income collection and disbursement part is the worst - my company outsources it to India; essentially this is "billing" and all you do is make sure that there are no cash breaks from rate differences, contract date differences, and mark differences.

There is nothing you really need to know except how a borrow and loan contract works. You borrow or lend securities and then provide collateral and then receive or return securities and collateral which has a certain rate applied to it.

Even if this job is to be a stock loan trader you wouldn't want to take it because it's a dead end. No exit opportunities, no relevant skills. The above sounds like an operations role which is even worse.

Let me know if you want even more details via PM.

 

Looking at your suffix HSG and the desk name, I have a good idea where and at which company.

When I interviewed with the group I'm assuming you will be talking to, there were no technical questions whatsoever, no brainteasers, just friendly chatting. They liked being asked questions and seemed to be proud of their team cohesion. Great guys.

 

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