The aim of this book is to present different manifestations and conventional transactions with
securities lending and repos. Securities lending as a way of short selling is not only suitable
for hedging cash market positions it is also an essential prerequisite for valuing options on
the futures market. Their valuation according to the option price theory is theoretically not
possible without securities lending. If at the same time no derivatives are traded on the
market as a substitute the valuation of a portfolio of cash and futures market positions is
difficult to practice. This is unacceptable for the annual financial statements of banks
insurance companies and other capital collection agencies. With securities lending and repos
returns can be achieved with selected strategies that are above the risk-free interest rate for
corresponding maturities. Market participants use differential arbitrage and compensatory
arbitrage with different interest rates and premiums on the market to achieve excess returns.
This is not pure short selling. Interest rates and premiums in the market should theoretically
strive towards equilibrium through these transactions. Market participants thus promote market
efficiency and the resulting changes in premiums and interest rates benefit all market
participants. This book targets finance professionals working in capital markets and wanting to
expand their knowledge of the topic.
