Risk glossary

 

Securities lending

Securities lending is a type of securities financing transaction in which a security such as a bond or stock is loaned to a borrower, who puts up collateral and pays a fee.

Securities lending may be used to transform low-quality assets into higher-quality collateral that is eligible for use in other transactions. A security, such as a stock, may also be borrowed to fill a short position, facilitate market-making, cover settlement or to arbitrage.

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