After doing some research, literature suggests that "most" securities lending happens over-the-counter (OTC) as opposed to securities trading which is mostly done through a centralized electronic exchange.
What alternatives are there to OTC for securities lending? is there any type of electronic market for securities lending?
How do borrowers source lenders? For example, let's say I want to borrow a million shares of company A. How do I find an investment fund that has a million shares of company A?
I have found many resources online including this detailed IOSCO document [PDF]. However, nobody talks about the process of how lenders and borrowers are matched up.
Also, how are pricing/lending fees determined? With securities trading in an electronic market, pricing is mark-to-market. Even in OTC securities trading, the pricing can be determined based on activity in the broader market.
If there is no "market" for securities lending how do you structure the pricing? For example, let's say a mutual fund loans a million shares of company A to a hedge fund with a fee of 1%. How is the mutual fund sure it found a competitive fee? Maybe there is another hedge fund that would have agreed to 1.1%.
I would appreciate if anyone with experience in security lending could shed some light, or provide some reading materials/resources.