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Securities lending
To sell a stock short you first have to borrow it from someone who owns it. Securities lending is the market that supplies those borrowed shares. The lender is nearly always a long term holder with no plans to sell, a pension fund or an index fund or an ETF, and they get paid a fee for handing the share over and taking collateral in return.
It's a big business now. Global lending revenue hit a record $15.3 billion in 2025, on loan balances passed $4 trillion for the first time, and total lendable assets sat at $46.7 trillion. That last ratio is the one worth pausing on: most of the supply is never borrowed at all, which is why borrowing a share usually costs almost nothing.
Usually. The distribution of borrow costs is the reason I built this page. It isn't a bell curve with a sensible average, it's two clumps. Almost every stock is basically free to borrow and a small handful cost a fortune, and the average of those two things describes nothing at all. There's also a section on how much of the lending revenue actually reaches the fund holders whose shares are being lent, where the published figures and the academic estimates don't agree. Do read the notes at the foot of the page before you lean on any number here. Three data providers give three different totals for the same year, and the detailed borrow cost study is from 2000 and 2001. I've left all of that visible rather than tidying it away.
Securities lending generated a record $15.3 billion of revenue in 2025, up 26%, with on loan balances passing $4 trillion for the first time against $46.7 trillion of lendable assets. Borrowing costs are bimodal rather than average. In the canonical study, 91% of stocks on loan were general collateral at a value weighted fee of 17 basis points, while the roughly 8.7% classified as special averaged 4.69% a year, and a handful reached 35% to 55%. Fund providers keep a slice: the largest exchange traded fund manager returns 81% to 85% of lending income to the fund, and an academic study of 494 funds found far lower pass through at smaller funds.
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