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SEC Allows Broker-Dealers to Use S&P 500 and Russell 1000 Stocks as Collateral

The SEC (U.S. securities regulator) said the change is intended to improve liquidity and support stronger risk management in securities lending.

Summary

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Terms & Concepts
  • Securities lending: A market practice in which investors lend stocks or other securities to borrowers, typically in exchange for collateral and a fee.
  • Collateral: Assets pledged to secure a loan or borrowing arrangement, helping reduce counterparty risk if the borrower fails to return the securities.