Stock Market Glossary
Securities lending
Temporary lending of securities in return for a fee and collateral.
In brief: Temporary lending of securities in return for a fee and collateral.
Meaning in practice
ETFs and funds can lend shares or bonds they hold to earn additional income. Collateral, counterparties and the sharing of revenue matter because securities lending brings operational and counterparty risk alongside the income.
Context for investors and traders
For investors, the term becomes practical in the context of objectives, time horizon, risk capacity and costs. A suitable solution can differ between two people even when they consider the same product or metric.
How to use this in practice
Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.
What to keep in mind
Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.
