securities lending

Securities lending is when an investor or institution temporarily lends their stocks or bonds to another party, usually a trader or hedge fund, for a fee. The borrower uses these securities for purposes like short selling or meeting trading obligations. During the loan period, the borrower provides collateral to protect the lender. The lending institution earns interest or fees, and the securities are returned at the end of the agreement. This activity helps improve market liquidity and provides additional income for lenders.