Fees for low/no activity

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adrian2
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Re: Fees for low/no activity

Post by adrian2 »

skepticus wrote:These posts have been a revelation. Does anyone know how widespread this lending is?
It's an additional money source available to be mined, for holders of publicly traded securities.
Do you object to the idea of making as much money as possible?
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Bylo Selhi
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Re: Fees for low/no activity

Post by Bylo Selhi »

SQRT wrote:One more reason (as if we needed one) not to buy fund products.
Nope, it's one more reason to choose your fundco carefully ;)
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parvus
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Re: Fees for low/no activity

Post by parvus »

skepticus wrote:These posts have been a revelation. Does anyone know how widespread this lending is?
Virtually universal.

I'm not sure why it should be seen as problematic. The key question is really the collateral requirements -- does the fundco/ETF demand 105% coverage for a short sale, settled daily? This is more or less standard.

Take away the short sellers, then you lose a two-sided market (ghariton disagrees with this definition) in which there are bulls and bears. So there's a loss in price discovery.
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skepticus
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Re: Fees for low/no activity

Post by skepticus »

Hello Adrian and parvus,

I appreciate your explanations. They put my mind at ease.

Before reading this thread, I had no idea that these kind of transactions existed nor how common they are.
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