Securities borrowers need to pay a fee and collateral for borrowing the securities.

# notice: security lending is also called securities loan transaction. Second point, this paragraph is a very
precise description of the securities lending.

# good definition of the net net fee. Also, I guess the “rebate” rate is what used in calculate the
future/forward prices? Rental fee is from borrower to lender. Rebate is from lender to borrower.

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# notice the concept between the title transfer and interest manufacturing. The real economic benefits
still seems reside on the lenders.

# the margin terminology here refers to the idea of overall collateralization, like the margin of error,
margin of possibility of default. If the market value of the collateral is $100. Given the margin 3%, the
actual nominal amount of collateral is $100/1.03 = $97.

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# it is a noticeable difference.

# haven’t thought about the investment income of the collateral, which is another source of benefits to
the lenders.

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# still, regardless whether it is repo or securities lending, the motivation of financing is common.

# notice the difference between the title and beneficial party.

# notice one final point, the reinvestment risks of cash collateral. The lender can reinvest the cash
collateral obtained from the borrower. But after they invest the cash in some money market fund, they
may not get the money back because those fund may invest in higher risk assets and lose money.

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