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{{fullanat|gmsla|2.3|2010}}A strange beast. Actually a type of financing transaction, though it is clothed it the language of [[buy]] and [[sell]]. | {{fullanat|gmsla|2.3|2010}}A strange beast. Actually a type of financing transaction, though it is clothed it the language of [[buy]] and [[sell]]. | ||
===Why?=== | |||
Start out with what it is ''for''. Let’s say a well-meaning [[hedge fund]] wants to bet against the price of a security. It does that by “[[short selling]]”. The key economic feature of a short sale is that you sell a security you don’t own in the first place. If you own it and sell it — well, that’s just a sale. | Start out with what it is ''for''. Let’s say a well-meaning [[hedge fund]] wants to bet against the price of a security. It does that by “[[short selling]]”. The key economic feature of a short sale is that you sell a security you don’t own in the first place. If you own it and sell it — well, that’s just a sale. | ||
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Therefore the [[stock loan]] itself isn’t a market transaction. No one goes [[on risk]] to the stock by entering into a [[stock loan]]. the {{gmslaprov|Borrower}} goes on risk by subsequently selling the stock it has borrowed. | Therefore the [[stock loan]] itself isn’t a market transaction. No one goes [[on risk]] to the stock by entering into a [[stock loan]]. the {{gmslaprov|Borrower}} goes on risk by subsequently selling the stock it has borrowed. | ||
===Does a stock loan count as [[borrowed money]]?=== | |||
According to Simon Firth on derviatives, [[Borrowed money|no]]. Nor does a [[repo]]. | |||
{{seealso}} | {{seealso}} | ||
*[[Stock lending]] | *[[Stock lending]] | ||
*[[Short sale]] | *[[Short sale]] |