Investment Bankers
since 1986

Pitfalls of Stock Loan Lending

While stock loan lending comes with a number of undeniable benefits
including fast money, low risk, and generally low interest rates, there are still a
few pitfalls of the trade that any responsible investor needs to be aware of.
Here are some examples of common pitfalls facing those who lend their stocks:

1. Stock Owners give up title and ownership of stock

Many people don’t realize that non-recourse loans offer you the opportunity to loan your securities in exchange for fast money, without ever giving up your title or ownership of stock. This method protects your carefully-compiled stock portfolio, while still allowing you to profit off of it in the short term. There’s no reason to give up your title or ownership in one of these deals, and doing so is a big mistake.

2. Risk of default

If you lend your stock portfolio to an unreliable borrower, you may face the risk that they will not return your securities promptly at the end of your loan term. ensures that our clients are matched with responsible borrowers who have been assessed by our risk team, and monitored over a long period of time. Additionally, we prevent borrowers from entering new transactions if we believe they have reached their limit. Additionally, offers you indemnity for any shortfall in collateral, should your borrower default. In this way, we ensure your protection, and only connect you reliable borrowers.

3. Selling Delay Risk

Sometimes, when lending securities as collateral, even a short delay in the process can result in a decline in the value of those securities. That’s why prides itself on our efficient process, which helps you enter a stock loan agreement with minimal delay, so you can gain the maximum profit on your securities.

4. Mispricing Risk

In some cases, borrowers and lenders may misprice the securities being loaned. This can result in a “collateral gap,” which essentially means a marked difference between the value of the securities you loan and the value of the cash loan you receive in return. That’s why we seek out multiple loan offers and present them all to you, in hopes of ensuring that you’re getting the best possible deal.

While stock loans are generally seen as one of the lower-risk financial transactions you can enter, they still come with risks. Luckily, with the help of, you can avoid those risks, and reap the rewards of a strategic stock-loan agreement.