OptiBank plans to be the first publicly traded company to utilize Interest Capturing Systems' proprietary "Security Issuer Rights Management" (SIRM) technology (patent pending).
The SIRM technology will allow OptiBank to control, and profit from, short-selling in OptiBank shares. OptiBank will set the rates at which, speculators and others can borrow shares to short, allowing OptiBank to profit directly when short-selling occurs. Furthermore, OptiBank will have the ability to completely stop short-selling in its shares should it desire to do so. This will provide full liquidity to holders of OptiBank shares without the fear of having short-sellers attack the stock and/or take liquidity when they look to sell their shares. In short, OptiBank, not speculators, will control (and profit from) short-sales of OptiBank shares.
In the future, the SIRM technology will allow companies (equity and debt) and governments (debt) to withhold at issuance, or recapture post-issuance, the ability to lend 100% of their shares (or debt). Once in control of the ability to lend its shares or debt, a company or government can then set the rate(s) at which it will lend its shares to short-sellers. All of the security lending income will accrue to the company in the form of higher profit, which is then distributed across the entire shareholder base.
The SIRM will completely end the problem of naked short-selling, as a company will choose an outside agent to handle its security lending process. A short-seller must represent to its broker/exchange that it has, in fact, paid the company for the right to borrow its shares before selling the company's shares short.
The SIRM technology will also make it harder and more expensive for speculators to attack a company using leverage and bearish derivative instruments like credit default swaps, low-delta put options, and other bearish derivative strategies by allowing a company to set the borrowing rate at which derivatives dealers can borrow the company's shares to hedge bearish derivative positions they have sold to speculators. Higher borrowing rates for the company's shares will be reflected in the pricing of bearish derivative instrments, discouraging their use. Better yet, the more demand for bearish derivative positions against the company, the more profitable the company becomes.
Finally, the SIRM technology will level the security lending playing field. Currently, large institutional investors (primarily mutual funds) lend their share holdings for the purpose of picking-up a few extra basis points of return. However, by lending their share holdings to short-sellers, institutional investors are directly contravening their investors' primary goal: price appreciation. Worse, many mutual fund companies do not share their security lending income with their investors but, instead, keep it at the management company level. Finally, many institutional investors invest the security lending proceeds in their own money market funds, which allows them to earn additional management fees on their investors' money. It's insane. Security lending is an industry that is ripe for cleaning -up, and the SIRM technology will go a long way towards doing so.
For further information on the proprietary SIRM technology, please contact:
Jay Hardison, CEO
Interest Capturing Systems, LLC, 11 Nearwater Lane, Darien, CT 06820
(203) 655-3012
hardison@intcapsystems.com
