SECURITIES LENDING at I Banks

Is securities lending considered to be a Credit Suisse and he said that his bonus and base was over $1mm. Is there any truth to that? Please elaborate

Securities lending at an investment bank

Securities lenders manage a portfolio of loans for clients. They lend out stocks (occasionally bonds) to clients who want them usually to cover shorts. The bank brokers the deal and puts up the collateral.

Most of the industry leaders in securities lending went the way of the dodo after the financial crisis.

You can get a fair amount of interactions with traders, learn about the market, and really learn about the mechanics of short selling. If you can effectively do all of those then exiting to an equity long-short fund is possible

from certified user @brotherbear"

It started as a BO function 20-25 years ago, and that may be why it still has that stigma at some firms. It's not BO, though. If you're speaking with clients, generating your own revenue/manage a portfolio of securities, and pricing anything for the market, you're FO. If you process trades and bug traders about their PnL and risk limits, you're MO. If you order the pencils, actually make the payments for trades, and fix computers when they crap out, you're BO.

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Take 0 risk is not entirely true. Before the credit crunch, they took a lot of risk, and it really hurt them. Just think about the assets securities lenders bought (financial floaters, structured products), and think of how much they lost on these products when they had to mark them to market.

This year, things should be better. In the first half of the year, with an aggressive Fed, and spreads tigthening across asset classes, anything they bought should have made them money.

Risk appetite is very low now and a good question to ask in an interview is where do they think the business is headed.

I would still take the interview. It's good practice and the current job market is difficult.

 

I wouldn't decline any interview unless its a scheduling conflict that can't be worked around.

As far as Securities Lending goes... I know there are Securities Lending traders and sales... also... not sure, but don't securities lending traders trade short positions? You should see if that can possibly lead to a HF trading opportunity.

Im not sure what an Executive Director is... I know these titles carry different weight from one bank to the next. Is it above or below an MD?

 

Okay people, I think I will answer my own thread. Yesterday I met with and spoke to an MD in securities lending from JPMorgan who is a relative of an MD banker friend from MS. Top level pay in securities lending(depending on the normal and not so normal economic cycle)for MD's is in the range of $2-3mm. Not bad considering the hours are reasonable compared to IBanking. The guy said that overall pay is about half of typical IBanking positions but catches up once your an MD,ED or VP levels.

 

computer guy said it once, but in case you missed it, securities lending is part of prime brokerage. it really has no thing to do with trading if thats what you're thinking. basically helping hedge funds finance their positions... something they need to find the security, sometimes they need a place to hold their securities...etc

 
ihavenomoneynow:
computer guy said it once, but in case you missed it, securities lending is part of prime brokerage. it really has no thing to do with trading if thats what you're thinking. basically helping hedge funds finance their positions... something they need to find the security, sometimes they need a place to hold their securities...etc

I think you're forgetting about the part of the securities lending business thats keeps custody of institutional investors' portfolios, and the traders who are lending those securities out to 3rd parties. If there are no securities lending traders, then where are brokers borrowing securities from on short-sales?

I don't really think you know what you're talking about.

FYI... this is copy-paste from someone in my directory...

International Securities Lending - Senior Trader - NY DESK

 

I have discovered some more on the securities lending position. In the last week I had the opportunity to meet and speak to some more key people in this field of banking. An MD from JPMorgan, Executive Director CS, VP and associates from MS. Basically, all of them love the job. They say the pay is very similar to IBD or S&T after sometime.

THIS IS THE BIG ONE.. ALL OF THEM, I REPEAT ALL OF THEM were from non target schools. The MD and ED both attended SUNY Albany- undergrad only and the VP and associates were from Baruch College and Queens College, respectively. So you do have a great shot not being from the more prominent schools, hope this helps

 
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I interviewed for a prime brokerage job recently, to be an intern in the fall. I beleive securities lending falls under the PB umbrella. The guy was a trader for sure, and their floor was as busy and crazy as any trade floor. He said they make most of their revenue from "pure volume" similar to cash trading, they focus on their clients and relationships, they do take spreads on the books they trade, and they hold very big books and very small spreads. It seems like you need alot of the same skills as you need in sales to succeed in securities lending.

He also focused on that I will be answering the phones alot, and the faster they can answer the phones, the more $$$ they make, it seriously sounded mostly volume driven and less strategic than energy/FICC/derivatives.

There is alot of money in the arena though especially since the Hedge Funds are growing more and more everyday.

 

Im willing to bet my left nut that this will become as competetive as S&T or IBanking in the near future as it becomes more and more lucrative. The movement towards the higher "pay areas" takes longer though.

 

Bump....Also interested.

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
 

Is it agency lending or a custodian bank? I would feel agent lenders operate more in a front office role-- they typically have a relationship management and sales function that make their living off of bringing assets under their arm. I would at least consider those working in the client service and prospect generation group to be front office.

I would agree that the exit ops are poor at best. Most people born in stock loan also die in stock loan... and while they work the easy hours, talk to most on the desk and your rare to find anyone that is genuinely happy they lend stock for a living.

 
MurrMade:
Is it agency lending or a custodian bank? I would feel agent lenders operate more in a front office role-- they typically have a relationship management and sales function that make their living off of bringing assets under their arm. I would at least consider those working in the client service and prospect generation group to be front office.
Agency Lending....
 

It started as a BO function 20-25 years ago, and that may be why it still has that stigma at some firms. It's not BO, though. If you're speaking with clients, generating your own revenue/manage a portfolio of securities, and pricing anything for the market, you're FO. If you process trades and bug traders about their PnL and risk limits, you're MO. If you order the pencils, actually make the payments for trades, and fix computers when they crap out, you're BO.

Sec Lending guys (at least in the buy-side) manage a portfolio of loans to clients. They're the only reason that equity long/short funds exist, and since VERY few people understand the mechanics of going short or have ever managed a portfolio of shorts, sec lending guys can exit to equity l/s funds without much difficulty.

It's not something you want to do for 10 years, but 2 years on the desk isn't bad. You'll get some good interaction with the other traders on the floor, understand a bit more about the markets, and learn about a niche area of the business. If you do your CFA at the same time, there's no reason you can't progress to running some sort of equity portfolio.

 
Jads305loans:

I am a stock loan lending agent if anyone would like information on how our process work, just comment to this post

Thanks for the offer. Can you run through your day? How do you manage your book/collateral quality/inventory? What is a "good day" for you or the team?

Thanks again

 

State Street is a place where you can make a comfortable middle/upper-middle class living, but will never be a wall street 'rockstar' in terms of prestige. As they are one of the largest custodial banks, their sec lending operation is massive. I am of the personal opinion that they only still exist because they're so massive and touch all of the major players. State Street is sort of stuck in the 20th century while everyone else is in the 21st. That being said, everyone I've met there was pretty friendly. I would personally go for the BB

 

Securities lending is lending out stocks (and sometimes bonds) to those who need to borrow them -- usually to cover shorts.

The AM or bank brokers the transaction and invests the required collateral.

Basically three types of job: account exec/program manager, brokering the borrowing/lending, and investing the collateral.

It is relatively unprestigious, and relatively less profitable since some big industry players (notably AIG) blew up during the financial crisis, leading to many lawsuits and big asset owners being much more cautious with their securities lending activity.

Exit opps? IDK. Most sec lending execs I've encountered (thru work on the lawsuits) have been industry lifers. Pay for seniors is, or was, quite decent.

 

sec lending very low risk - very safe, but very low risk - not sure about exit opps

I felt bad since no one responded :/ I hear JPM's sec lending is decent, but the head of ops overseas everything there so I don't think it's as respected as other desks.
@ gs it's decently reputable tho

"so i herd u liek mudkipz" - sum kid "I'd watergun the **** outta that." - Kassad
 

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