Other conventional banks have also expressed interest in providing Sharia compliant products to an increasing customer base.
Lenders are willing to extend credit on a secured basis because these transactions are usually short-term, over-collateralized, backed by reasonably liquid securities, subject to daily mark-to-market and re-margining requirements, and exempt from the automatic stay in insolvency proceedings. In the most common practice, a broker-dealer uses SFTs to finance either securities inventory or a back-to-back SFT loan to another financial firm (SFT matched book).