Single Stock Futures – An Alternative to Securities Lending:
Securities lending is a process that involves both market and counterparty risk. Securities lending is similar to an EFP transaction utilizing single stock futures (SSF) with some very stark differences that simplifies the procss, significantly enhances the total return, and removes counterparty risk from the process.

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Basis Point Discussion:
When an investor buys an asset, they expect the return to be commensurate to a certain level of risk. Too often the investor is disregarding the opportunity cost of receiving a risk-free rate of return as well. Single stock futures lower this opportunity cost by enabling an investor to finance an equity position more efficiently, thus improving the risk-reward ratio of their investment.

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How futures can simplify securities lending/borrowing:
Single stock futures provide significant cost advantages and flexibility for both the lenders and borrowers of stock by enabling them to exchange positions without many of the restrictions and intermediaries that exist with existing programs. As a result, the lenders and borrowers are able to reduce revenue sharing agreements, fees, counterparty risk, and the risk of the recall of positions.

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Calculate the savings with Single-Stock Futures:
When looking to raise capital, single stock futures provide efficiency, transparency, and anonymity to the financing process. In the bond world, investors have the repo market. In the equity world, investors have the security futures market. By utilizing the security futures market, investors have the ability to utilize their equity positions as collateral for short-term loans at rates that are competitively determined by the marketplace.

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