Already for a while, it has long been possible to lend stocks via LEX derivative contracts on the Helsinki Exchanges. Now lending has also begun in the share market. Accordingly, the Finnish Securities Market Act was recently amended to include new general provisions regarding securities lending and repurchase agreements entered into by securities intermediaries.
The new cash lending contracts on Helsinki Exchanges are bilateral contracts for which collateral is not required by the Exchange. The lending period can be of any duration under 20 days and the size of lots can be freely decided by the parties.
The Finnish Central Securities Depository has also started to use stock lending in its clearing system. The maximum length of lending contracts at the Securities Depository is ten days, and this ensure that the transactions are tax-free. The Depository is not a party to the contracts and does not require collateral. Contracts are reported to the authorities.
This article contains general information on the subject matter and shall not be relied upon for a specific case. Specialist advice should be sought with respect to any specific circumstances.