lending at a premium

Lending at a premium

A loan from one broker to another of securities to cover a customer's short position, with a borrowing fee included. A fee is unusual since securities are normally lent freely between brokers.
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Lending at a Premium

A loan of a security between two brokers where the lending broker charges a fee to the other. Lending at a premium occurs to cover the cost of the short sale of the security by a client. It is not common to lend at a premium (most brokers lend securities to each other for free as a courtesy); it primarily occurs for illiquid securities.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

lending at a premium

The imposition of an extra fee when securities are lent by one broker to another to cover a customer's short sale. Although lending at a premium is fairly unusual, it may occur when a particular security is difficult to borrow.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.