Who Are The Securities Lenders
Lending against stocks, or securities lending, can be a complicated issue for many new investors or those who have never had to take out such loans.
One may even question where to procure such a loan. Thankfully, there are plenty of opportunities to do so from well-established and vetted sources.
Many security loans are worked out by dealers (the lenders) and brokers (those representing the borrowers). Rarely is an individual investor involved unless they have a sizable portfolio and are requesting a very large loan, or they are acting as their own broker. Most investors, however, will not experience this since they pay others to handle the finer details of their accounts.
Still, some people like to know exactly where their stocks are going, and find themselves wondering what organizations actually do the lending. The answer is both simple and complex: basically, any large financial institution that chooses to get involved in security lending can do so. This can be an investment firm, a bank, or a credit union, so long as they have the sufficient capital to cover the costs of the loans.
So, if you`re curious about borrowing money against stocks, speaking with a broker is the quickest way to get the process started. They already have established rates and contracts ready with major lenders for when a suitable investor comes along. If, however, you are merely curious about whether or not a particular financial institution engages in such loans, you will need to contact them directly.