Editing Short (finance) (section)

=== Securities lending ===
{{Main|Securities lending}}

When a security is sold, the seller is contractually obliged to deliver it to the buyer. If a seller sells a security short without owning it first, the seller must borrow the security from a third party to fulfill its obligation. Otherwise, the seller ''fails to deliver,'' the transaction does not [[settlement (finance)|settle]], and the seller may be subject to a claim from its [[counterparty]]. Certain large holders of securities, such as a [[custodian bank|custodian]] or [[investment management]] firm, often lend out these securities to gain extra income, a process known as [[securities lending]]. The lender receives a fee for this service. Similarly, retail investors can sometimes make an extra fee when their broker wants to borrow their securities. This is only possible when the investor has full [[title (property)|title]] of the security, so it cannot be used as collateral for [[margin buying]].