Editing Security (finance) (section)

== Collateral ==
The last decade has seen an enormous growth in the use of securities as [[Collateral (finance)|collateral]]. Purchasing securities with borrowed money secured by other securities or cash itself is called "[[buying on margin]]". Where A is owed a debt or other obligation by B, A may require B to deliver [[property right]]s in securities to A, either at inception (transfer of title) or only in default (non-transfer-of-title institutional). For institutional loans, property rights are not transferred but nevertheless enable A to satisfy its claims in case B fails to make good on its obligations to A or otherwise becomes [[Insolvency|insolvent]]. Collateral arrangements are divided into two broad categories, namely [[security interest]]s and outright collateral transfers. Commonly, commercial banks, investment banks, government agencies and other institutional investors such as [[mutual fund]]s are significant collateral takers as well as providers. In addition, private parties may utilize stocks or other securities as collateral for portfolio loans in [[securities lending]] scenarios.

On the consumer level, loans against securities have grown into three distinct groups over the last{{which?|date=March 2024}} decade:
#Standard Institutional Loans, generally offering low loan-to-value with very strict call and coverage regimens, akin to standard margin loans;
#Transfer-of-Title (ToT) Loans, typically provided by private parties where borrower ownership is completely extinguished save for the rights provided in the loan contract; and
#Non-Transfer-of-Title Credit Line facilities where shares are not sold and they serve as assets in a standard lien-type line of cash credit.

Of the three, transfer-of-title loans have fallen into the very high-risk category as the number of providers has dwindled as regulators have launched an industry-wide crackdown on transfer-of-title structures where the private lender may sell or [[short (finance)|sell short]] the securities to fund the loan. Institutionally managed consumer securities-based loans on the other hand, draw loan funds from the financial resources of the lending institution, not from the sale of the securities.

Collateral and sources of collateral are changing, in 2012 gold became a more acceptable form of collateral.<ref>{{Cite web|title = CME Clearing Europe collateral types to include gold bullion {{!}} Securities Lending Times news {{!}} securitieslendingtimes.com|url = http://www.securitieslendingtimes.com/securitieslendingnews/industryarticle.php?article_id=218278 |publisher = www.securitieslendingtimes.com|access-date = 2015-12-17}}</ref> By 2015, recently Exchange-traded funds (ETFs) previously seen by many as unpromising had started to become more readily available and acceptable.<ref>{{Cite web|title = Markit makes its ETF mark with big market players {{!}} Securities Lending Times news {{!}} securitieslendingtimes.com|url = http://www.securitieslendingtimes.com/securitieslendingnews/industryarticle.php?article_id=220267 |publisher = www.securitieslendingtimes.com|access-date = 2015-12-17}}</ref>