Lombard loan vs margin loan vs stock loan: what the terms actually mean.
Three terms, two instruments. A Lombard loan and a stock loan are the same thing under different names; a margin loan is something else. This page defines each and sets them side by side.
Three names, two instruments.
A Lombard loan and a stock loan are two names for the same instrument: a loan secured against a pledge of listed shares, on which the borrower keeps beneficial ownership and recovers the full position on repayment. A margin loan is a different instrument — a standardised brokerage facility secured by the securities held in a trading account. All three let a holder borrow against shares, which is why the terms are so often confused.
What each term means.
| Term | What it means | Where the term is used | Same instrument? |
|---|---|---|---|
| Lombard loan | A bespoke loan secured by a pledge of marketable securities, most often listed shares. Ownership is retained; the position is recovered on repayment. | UK, Switzerland, Germany, and the European and Asian private-banking markets. | Yes — the same as a stock loan and securities-backed lending. |
| Stock loan | In common usage, a loan secured by pledged listed shares. (In a separate technical sense, securities lending to short-sellers — a different transaction.) | United States and general usage. | Yes, in the borrowing-against-shares sense — the same as a Lombard loan. |
| Margin loan | A standardised brokerage credit facility advanced against the securities held in a trading account, with automatic margin calls. | United States and global brokerage. | No — a different instrument. |
Why a Lombard loan and a stock loan are the same thing.
A Lombard loan, a stock loan, and securities-backed lending describe one instrument: the borrower pledges listed shares to a custodian, draws a cash loan against a fraction of their market value (the loan-to-value), keeps beneficial ownership and dividend rights subject to structuring, and recovers the full position on repayment. The name changes with the market, not the mechanics.
“Lombard loan” is the private-banking term, dominant in the United Kingdom, Switzerland, Germany, and the Asian wealth centres; it descends from the Lombard merchant-bankers of medieval Europe. “Securities-backed lending” is the descriptive institutional term. “Stock loan” is the colloquial term in the United States and general usage. A holder comparing quotes from a Swiss private bank, a US financing desk, and a specialist arranger may see all three labels for what is, structurally, the same transaction.
The variables that actually shape the deal are the same regardless of the label: the loan-to-value, the tenor, the recourse profile, the custody arrangement, and the disclosure treatment. Those are set out in how securities-backed lending works and, for the recourse choice specifically, in recourse profiles explained.
Why a margin loan is not the same.
A margin loan is a standardised facility a brokerage extends against the securities in a client’s account. It is genuinely useful — but it is a different instrument, built for a different purpose. The terms are set by the broker, not negotiated: a published loan-to-value (commonly 50% initial under Federal Reserve Regulation T in the United States), a published rate, open-ended tenor, full recourse to the account and often to the borrower personally, collateral held at the broker, and automatic margin calls that can force a sale at short notice.
That standardisation suits an active, diversified investor seeking short-term, revolving leverage. It suits a substantial or concentrated holder far less well: the open-ended tenor, the full recourse, and the rapid, discretionary margin calls are precisely the features a bespoke Lombard loan is structured to avoid. The structural contrast is set out in full in Stock Loan vs Margin Loan.
The three, compared.
| Lombard loan | Stock loan | Margin loan | |
|---|---|---|---|
| Instrument | Bespoke securities-backed loan. | Bespoke securities-backed loan (same instrument). | Standardised brokerage facility. |
| Terms | Negotiated per position. | Negotiated per position. | Standardised across the broker’s clients. |
| Tenor | Fixed, typically 12 to 36 months. | Fixed, typically 12 to 36 months. | Open-ended; callable at short notice. |
| Recourse | Non-, limited-, or full-recourse (chosen). | Non-, limited-, or full-recourse (chosen). | Full-recourse to the account, often personally. |
| Custody | Third-party custodian, bankruptcy-remote. | Third-party custodian, bankruptcy-remote. | Held at the brokerage. |
| Margin calls | Negotiated triggers, with defined cure periods. | Negotiated triggers, with defined cure periods. | Automatic and rapid, often same-day. |
| Disclosure | Pledge typically disclosable for substantial holders. | Pledge typically disclosable for substantial holders. | Usually not separately disclosable. |
The Lombard-loan and stock-loan columns coincide because they name the same instrument; the margin-loan column is where the differences lie. A general comparison of instrument types, not a quote or a representation about any specific transaction. See the disclosures.
The word that means two things.
One source of confusion deserves isolating. “Stock loan” carries two distinct meanings. In the sense used throughout this site, it is a loan of cash secured by a pledge of listed shares — the borrowing described above. In a separate, technical sense used on securities-finance desks, a “stock loan” is securities lending: the lending of the shares themselves, usually to short-sellers, against cash collateral. That is a different transaction with a different purpose, and it is not what a shareholder seeking liquidity is looking for. Where the distinction matters, the descriptive term “securities-backed lending” removes the ambiguity.
Which fits which holder.
Because a Lombard loan and a stock loan are the same instrument, the real choice is between a bespoke securities-backed loan and a brokerage margin loan — and that choice is structural, not a matter of which label or which headline rate looks better.
- ·A bespoke securities-backed loan (Lombard loan / stock loan) fits a substantial or concentrated holder who wants a fixed tenor, the option of a non-recourse structure that bounds the downside, custody outside the lender, and disclosure planned per market. It suits a position where a forced sale would be damaging.
- ·A margin loan fits an active, diversified investor seeking modest, short-term, revolving leverage, who is comfortable with full recourse, standardised terms, collateral held at the broker, and rapid margin calls.
These are not the only routes to liquidity from a listed position. For the wider comparison against an outright sale and a collar hedge, see ways to raise liquidity, compared; for plain-English definitions of the terms used here, see the glossary.
On the three terms.
Q · 01 Is a Lombard loan the same as a stock loan?
Q · 02 What is the difference between a Lombard loan and a margin loan?
Q · 03 Is a margin loan the same as a stock loan?
Q · 04 Why are these three terms so often confused?
Q · 05 Which should I use to borrow against my shares?
Last reviewed 14 July 2026. This page is educational and is not personalised legal, tax, or investment advice; see our editorial standards and disclosures.
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