STSM042160 - Exemptions and reliefs: reliefs: stock lending and repurchase relief - agency stock borrowing
Stock lending relief is primarily aimed at principal broker dealers but relief on ‘Agency’ stock lending is also permissible on-exchange. Agency lending is occasionally used where a loan or repo would otherwise not be eligible for relief because neither of the two parties involved is a member of a regulated market, MTF or recognised foreign exchange. By routing loans through a member, via what is called a ‘back-to-back’ principal transaction (i.e. generating a loan into and a loan out of the member firm), transactions may be brought ‘on-exchange’ and accordingly eligible for relief.