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Finance GlossarySecurities Lending
Securities Lending
Definition of Securities Lending
Securities Lending is a process through which investors can lend their shares to borrowers, usually for short selling. In return, they receive interest or fees. The lender continues to be the owner of the assets. The borrower needs to return the securities later. Securities lending helps in improving liquidity in the market. Long-term investors can also earn extra income on holdings that remain idle for a while.
Related Terms
Volume Weighted Average Price (VWAP)
VWAP is a trading benchmark that calculates the average price of a security weighted by trading volume throughout the day. Institutional traders often compare execution prices to VWAP; buying below VWAP suggests efficient trade execution, while prices above it may indicate higher-than-average transaction costs.
Cash Commodity
A cash commodity refers to physical goods like aluminium, cotton, gold, silver, zinc, and other tangible goods which are delivered to a trader or company most commonly after exercising derivatives like options and futures contracts.
Cash commodities are also known as actuals. A derivative contract for cash commodities will explicitly state the delivery date, price, and quantity. These details are necessary as some contracts may not involve the delivery of goods.
Cash commodities are also known as actuals. A derivative contract for cash commodities will explicitly state the delivery date, price, and quantity. These details are necessary as some contracts may not involve the delivery of goods.
Triple Top
A triple top is a bearish chart pattern where a stock or index reaches the same resistance level three times but fails to break above it. This repeated failure signals weakening buying momentum and a potential trend reversal from uptrend to downtrend. For example, if a stock rises to ₹500 three times over several months and falls each time, it may form a triple top, indicating a possible decline ahead.
Defensive Stock
A defensive stock refers to the shares of iconic companies that generate stable and consistent returns and dividends, regardless of the market conditions.
Defensive stocks are rare because companies that have defense against every market condition are rare.
While defensive stocks may not generate high returns, they are known to add stability and defense against declining economic conditions. In India, stock of ITC Limited is an example of a defensive stock.
Defensive stocks are rare because companies that have defense against every market condition are rare.
While defensive stocks may not generate high returns, they are known to add stability and defense against declining economic conditions. In India, stock of ITC Limited is an example of a defensive stock.
Placing
Placing, or Private Placement, is a process of raising capital in which a company sells its securities (stocks or bonds) to a selected group of investors (such as banks, mutual funds, insurance companies) or high net worth individuals instead of selling them to the general public through a public offering (like an IPO). In India, companies frequently use private placement to raise funds in a short period of time from specific investors. This is a faster and less expensive process than a public issue.
Stop Loss Order
A stop loss order is an instruction to automatically sell a stock when a certain price is reached. This type of order helps investors limit potential losses and manage their risk. Stop loss orders are vital for intraday traders, particularly in volatile markets. Once a stop loss order is set, traders need not monitor the stock price constantly. This ensures peace of mind while they can protect their capital.
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