Securities Lending

Securities Lending is a specialized financial transaction where the owner of a security, the lender, temporarily transfers the asset to a borrower in exchange for collateral and a fee, primarily serving to enhance market liquidity, facilitate short selling, and support arbitrage strategies across global financial markets. This practice is a critical component of the shadow banking system, with the global market size often exceeding $2.5 trillion in lendable assets, and is distinct from a repurchase agreement (repo) primarily by the type of collateral and the legal structure of the transfer.