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Securities Lending: What It Is and How It Works

By Kristi WaterworthUpdated Sep 12, 2025 at 1:57 PM | Fact-checked by Frank Bass

Key Points

  • Securities lending enables earning from stocks by renting them out, not selling.
  • It underpins short-selling, providing essential market liquidity and enabling profit via price drops.
  • Brokerages mitigate lender risk with high collateral, safeguarding against borrower default.

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