How Much Does a Stock Loan Cost?

The cost of a stock loan is, first and foremost, the financing rate applied to the drawn principal — the interest a borrower pays for the use of the cash advanced against pledged shares. Around that sit a small number of ancillary items: any structuring or arrangement cost reflecting the work to assess and document the facility, and custody costs where shares are held in qualified, bankruptcy-remote custody for the loan’s duration. There is no single rate that applies to every position. Two borrowers pledging different shares, in different currencies, on different recourse terms, will be quoted differently, because each variable changes the lender’s risk and therefore the price of carrying it. The firm quotes indicative ratios and pricing only after reviewing the specific holding; published reference points on the indicative terms page describe principles and ranges rather than a binding tariff. Specifics depend on the holding and jurisdiction, and independent advice should be taken before acting.

Loan-to-value and price move together. The advance rate is the proportion of the assessed collateral value the lender is willing to release; a higher advance rate leaves a thinner cushion between the loan balance and the collateral, so the lender prices that reduced margin of safety into the financing rate. A borrower seeking a conservative advance against liquid shares will generally see a lower rate than one pushing toward the upper end of what the collateral supports. Tenor interacts with this: longer facilities — tenors commonly run one to three years — expose the lender to a wider band of potential price movement, which can feed into pricing. The recourse profile matters too. A non-recourse structure transfers more downside to the lender, since the borrower may surrender the shares rather than cover a shortfall, and that protection is reflected in the cost. Choosing between these trade-offs is the subject of choosing a recourse profile.

No responsible lender can give a firm rate before seeing the position, because every input to the price — the share, its liquidity, the size of the stake, the listing jurisdiction, the requested advance rate, the tenor, the recourse profile and the currency — is specific to the borrower. An early figure is therefore indicative: a reasonable expectation based on the information presented, subject to revision once full due diligence, legal review and a formal collateral valuation are complete. This is not evasion; it protects the borrower from being anchored to a number that may not survive scrutiny of the actual holding. In practice, indicative terms typically follow within one to two business days of a clear description of the position, with firm terms set out in the facility documentation. None of this constitutes an offer or investment, legal or tax advice; the precise cost of any facility depends on the holding and jurisdiction, and independent professional advice should be taken before proceeding.