Top 3 Securities lending Interview Questions
Browse 3 real-world technical and behavioral interview questions about Securities lending. Review scenarios, edge cases, and architectural best practices.
A dividend is declared and half the client's holding is out on loan while part of the rest is pledged as collateral. Who receives the income, who votes, and what does your system show the client?
Lending transfers legal title, so the lender receives a manufactured payment from the borrower and cannot vote the lent stock. Whether a pledge does the same depends on whether it is a title transfer or a security interest. The client still needs one economic position, with the legal breakdown reported underneath it.
Settlement date arrives and the securities you owe are not in the account. Talk me through what happens next.
Nothing settles, because delivery versus payment moves both legs or neither, and the trade stays open and is re-attempted rather than cancelled. You then choose between partial delivery, borrowing to cover and being bought in, while entitlements arising during the fail belong to the buyer through a market claim.
If T+1 was hard, why is same-day or atomic settlement not simply one more day of compression?
Because shortening the cycle removes the window that netting depends on. Settle each trade on its own and gross obligations replace net ones, so cash and stock must be in place trade by trade, sequencing starts to matter, and settlement risk is traded for intraday liquidity risk.