Securities Lending

The practice of loaning shares of stock, bonds, or other securities to another party, typically to facilitate short selling, in exchange for a fee and collateral. The lender (often a pension fund, mutual fund, or ETF) earns incremental income on holdings that would otherwise sit idle. Securities lending is the plumbing that makes short selling possible, and hard-to-borrow fees on heavily shorted stocks can spike dramatically during squeeze events.