Shorting our investments....., page-14

  1. 84 Posts.
    As to who gets the benefit of lending stock, depends who is lending it (obvious i know!). if it is the administrator of a large super fund (eg Australian super) then they keep the fees as revenue and helps keep costs down to members, so an indirect benefit to customer.

    If it is a fund manager then the income from lending stock would be counted as income for the fund, so a direct benefit for the member.

    Where it gets confusing is often both parties listed above outsource their custodial services, and if the custodian lends the stock they keep the fees generated. Often the parties above allow this as a trade off for reduced custodial fees. This is also the case with non-transferable rights issues and ipos linked to existing trading stock (eg CBA PERLS VII).

    Shorting stock is not new, manipulating the market is not new. The first case of short selling was in 1609 in the Dutch East India company stock, it was naked shorting. So be thankful they at have to borrow the stock first now days!
 
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