A glossary of securities-backed lending.
Plain definitions of the terms that recur across institutional stock-loan transactions — the instrument, the structural variables, and the market mechanics — written for substantial holders and their advisers.
Glossary terms
Average Daily Trading Volume (ADV)
The typical volume of an issuer’s shares traded per day, used to estimate how long a pledged position could be liquidated without disproportionate market impact. A pledge representing many days of ADV cannot be sold cleanly in a short window, and is haircut in the loan-to-value accordingly.
Related: Loan-to-Value Calibration
Bankruptcy-Remote Custody
A custody arrangement that insulates the pledged shares from the credit of the lender and the custodian, so that a failure of either does not put the borrower’s shares at risk. Bankruptcy-remote custody is foundational to a well-structured transaction and matters far more than a small difference in coupon.
Related: Why Structuring Beats Pricing
Beneficial Ownership
The economic ownership of the shares — the right to dividends, to any increase in value, and (subject to structuring) to vote. In a properly structured stock loan the borrower retains beneficial ownership throughout; only a security interest passes to the lender. This is the central distinction between a loan and a sale.
Collateral
The asset pledged to secure the loan — in securities-backed lending, the listed shares. The lender’s recovery in a stress scenario depends on the liquidity and value of the collateral, which is why the characteristics of the underlying drive the loan-to-value calibration.
Concentration Risk
The risk that arises when a large share of a holder’s wealth sits in a single position. A securities-backed loan lets a concentrated holder release capital to diversify around the position without selling it — hedging the concentration in economic terms while keeping the holding intact.
Related: Concentrated Single-Stock Liquidity
Corporate Action
An event initiated by the issuer that affects its shares — a dividend, rights issue, split, merger, or takeover. Because a stock loan runs for years, the pledge documentation specifies how each corporate action is handled, including who may exercise rights and how takeover proceeds are treated.
Related: Dividends & Corporate Actions
Coupon
The interest rate on the loan. While it is the easiest variable to compare across quotes, it is rarely the one that determines whether a transaction was the right one; the structural variables — loan-to-value, recourse, custody, disclosure — typically matter more.
Related: Why Structuring Beats Pricing
Cross-Currency Loan
A structure in which the loan is advanced in a currency different from that of the pledged shares — for example, a US-dollar loan against a sterling-listed position. The cross-currency element introduces foreign-exchange exposure on the principal, addressed through an LTV haircut, an FX trigger band, or an embedded hedge.
Related: Cross-Currency Stock Loans
Disclosure Threshold
The shareholding level above which a substantial holder must publicly disclose their interest — and, in most markets, any pledge over those shares — under the relevant beneficial-ownership regime. Thresholds and the treatment of pledges vary by exchange, which is why disclosure timing is mapped per jurisdiction at the structuring stage.
Related: Per-market disclosure regimes
Dividend Pass-Through
The default arrangement in which dividends declared on the pledged shares are passed to the borrower for the life of the loan, consistent with the borrower’s retained beneficial ownership. The operational route depends on the custody arrangement; the economic result is that the borrower keeps the dividend stream.
Related: Dividends & Corporate Actions
Floor
In a non-recourse structure, the defined level at which a fall in the underlying transfers the pledged collateral to the lender and releases the borrower from further liability. The floor is the borrower’s pre-agreed maximum downside on the transaction.
Related: Recourse Profiles Explained
Free Float
The proportion of an issuer’s shares not held by insiders, controlling shareholders, or other restricted holders, and therefore available to trade. A larger free float implies a deeper market in which a lender could liquidate, and supports a higher loan-to-value on an otherwise comparable position.
Related: Loan-to-Value Calibration
Full-Recourse
A structure in which the borrower remains liable for the entire loan regardless of the value of the collateral. If the realised collateral falls short of the outstanding loan, the borrower owes the difference. Full-recourse preserves the highest loan-to-value but exposes the borrower to a tail risk on the underlying.
Related: Recourse Profiles Explained
Legal Title
The registered ownership of the shares, which may differ from beneficial ownership. In cross-border structures legal title is often held by a qualified custodian on bare-trust terms for the duration of the loan, while beneficial ownership — and the economic exposure — remains with the borrower.
Limited-Recourse
A calibrated middle ground in which the borrower is liable for any deficiency up to a defined cap, but not beyond. It permits a higher loan-to-value than non-recourse while preserving a bounded downside for the borrower. The specific cap is the principal point of negotiation.
Related: Recourse Profiles Explained
Loan-to-Value (LTV)
The ratio of the cash advance to the market value of the pledged shares at inception. LTV is calibrated per position rather than published as a rate, and is driven by free float, trading volume, volatility, sector, shareholder concentration, and the structure of the transaction. A higher LTV releases more capital but reduces the lender’s collateral cushion.
Related: Loan-to-Value Calibration
Lock-Up
A contractual restriction, common after an initial public offering, preventing insiders from selling their shares for a defined period. A securities-backed loan can release liquidity against locked-up shares without selling them, provided the pledge is permitted by the lock-up agreement and applicable rules.
Related: Pre-IPO & Lock-Up Bridges
Lombard Lending
Lending against a pledge of liquid financial assets, of which listed equity is the most common. The term originates in private banking and is used in Europe and Asia to describe securities-backed credit. Lombard lending against a concentrated single-stock holding is the institutional form arranged here.
Margin Call
A demand for additional collateral or partial repayment triggered when the underlying falls below a defined threshold, restoring the loan-to-value to within agreed limits. The borrower has a defined window to meet the call; failure to do so may permit the lender to realise the pledged shares.
Margin Loan
A loan from a broker against a portfolio held in a brokerage account, typically with daily marking, broad rehypothecation, and discretionary liquidation. It differs materially from an institutional stock loan, which is bespoke, custodied, and structured around a defined recourse profile and disclosure plan.
Related: Stock Loan vs Margin Loan
Non-Recourse
A structure in which the borrower has no liability beyond the pledged shares. If the underlying falls and the collateral is realised for less than the loan, the loss is the lender’s — there is no deficiency claim. Non-recourse caps the borrower’s downside at the loss of the shares, in exchange for a lower loan-to-value.
Related: Recourse Profiles Explained
Pledge
The grant of a security interest over the shares in favour of the lender, without an outright transfer of ownership. The shareholder remains the beneficial owner; the pledge gives the lender a claim over the shares if the loan is not repaid. In most major markets a pledge by a substantial shareholder is itself a disclosable event.
Related: Per-market disclosure regimes
Qualified Custodian
A regulated bank or specialist securities custodian that holds the pledged shares for the duration of the loan. The custodian receives dividends, processes corporate actions, and holds legal title where the structure requires it. The standing of the custodian is part of the borrower’s counterparty assessment.
Recourse
The extent of the borrower’s liability beyond the pledged collateral. The recourse profile — full, limited, or non-recourse — allocates the downside risk between borrower and lender and is one of the variables that most affects the outcome of a transaction.
Related: Recourse Profiles Explained
Rehypothecation
The lender’s re-use of pledged collateral for its own funding purposes. Whether rehypothecation is permitted is a material structural point: a no-rehypothecation arrangement keeps the borrower’s shares segregated and is generally preferable for a holder focused on recovering the exact position on repayment.
Securities-Backed Lending
A loan secured by a pledge of listed shares. The shareholder pledges securities as collateral, receives cash against a fraction of the position’s market value, retains beneficial ownership and dividend rights subject to structuring, and recovers the full position on repayment. Also referred to as share-backed financing, Lombard lending against listed equity, or a stock loan.
Related: What We Do
Stock Loan
A common term for securities-backed lending, especially in market-specific contexts. The shareholder borrows against a pledge of exchange-listed shares rather than selling them. The term is used interchangeably with share-backed financing throughout institutional practice.
Related: Markets Directory
Stop-Loss / Liquidation Trigger
A deeper threshold at which the lender may liquidate the pledged collateral, sometimes without a prior margin call. Stop-loss triggers are more common in non-recourse and limited-recourse structures, where the lender’s protection depends on liquidating before the collateral value falls below the loan amount.
Tenor
The term of the loan. Institutional securities-backed loans are typically arranged for twelve to thirty-six months, often with negotiated extension options. Longer tenors generally carry a lower loan-to-value, because the lender’s stress window is longer.
Title-Transfer Structure
A structure in which legal title to the shares passes to the lender for the life of the loan, in contrast to a pure pledge. Title-transfer can offer operational and tax advantages in some markets but changes the borrower’s legal relationship to the shares; the choice between pledge and title-transfer is a structuring decision made per jurisdiction.
Volatility
The degree to which the underlying share price fluctuates. A higher-volatility underlying requires a larger loan-to-value haircut, because the lender’s collateral cushion must absorb a larger price move during the margin-call response window. Volatility is a principal driver of LTV differences between sectors and between mature and recently-listed issuers.
Definitions are provided for general explanation only and do not constitute legal, tax, or investment advice. The structure of any individual transaction is determined at the time of engagement. See the disclosures.
From terms to transactions.
What We Do
How the instrument works in institutional form — pledge, loan-to-value, recourse, custody, and disclosure.
Read →Insights
Technical writing on LTV calibration, recourse profiles, cross-currency structures, and the structuring discipline.
Read →Markets
Per-market eligibility, regulatory framework, and disclosure regime across 38 exchanges.
Read →