The big lending houses have there own brokers. Why would State Street or J P Morgan use outside brokers. If you doubt that go and have a look at todays announcement on the PLS ASX site for an announce of JPMorgan becoming a substantial shareholder. Look at the activity over the last few months. It's enormous full of buy's, sells , borrows, borrow returns and other activity.
Pay special attention to the questions asked an replies schedule required by the ASX. Much of it covers the rules governing the making shares available to be borrowed and returned. What are the rights of both the borrower and the lender associated with the shares.
Why hire agents when through one of your subsidiaries you can hire accounts staff in house to handle the process. Much less risk associated with in-house operations rather than an outside organisation. Yes they may use outside accounts staff to handle the paperwork but they would not be responsible for the entire lending process involved.
You seem to be implying that the lender of the shares has no access to any of the fee's charged for the process.
That just doesn't make any sense at all. Why bother?
As far as your reference to bankruptcy. Have you not heard of margin accounts, margin deposits and margin calls. For the borrower of the shares this is a standard requirement. If the margin account is not maintained daily the forced return of the shares is triggered as is legal action.
My use of an individual investor lending was just a simplification to get across the concept that I was trying to pass on.
Do some research.
cheers Lies
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