securities lending

Definition

A loan of a security from one broker/dealer to another, who must eventually return the same security as repayment. The loan is often collateralized. Securities lending allows a broker-dealer in possession of a particular security to earn enhanced returns on the security through finance charges.

Use securities lending in a sentence

We had engaged in some securities lending in the past, but refrained from doing so in recent years due to the uncertain economic situation.

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The securities lending practice was considered a very risky exchange since it was hard to judge the integrity of the individuals on both sides of the transaction.

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The securities lending practice of the brokers and traders was mutually beneficial as they were always communicating and deciding which option is best with each other.

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Securities Law Enforcement Remedies Act of 1990 securities loan