Stock Loan
Definition
A transaction in which one party lends shares to another in exchange for collateral (usually cash plus a fee). The borrower can then sell those shares short. Standard documentation uses the Global Master Securities Lending Agreement (GMSLA).
Related Terms
Securities Lending
The process by which shares are borrowed from institutional holders (like superannuation funds) to facilitate short selling. Lenders receive a fee for making their shares available.
Locate
The process of confirming a lender for shares before executing a short sale. Australian law (Corporations Act s1020B) requires sellers to have a securities lending arrangement in place before they short — a 'locate' is the broker's confirmation that shares are available to borrow.
Rebate Rate
The interest a short seller earns on cash collateral posted to borrow shares, less the borrow fee charged by the lender. For hard-to-borrow stocks the rebate can be negative — the short seller pays to hold the position.
See short selling in action
Explore real-time ASIC short position data for ASX stocks.