Security lending

[Poorfribourgeois]

Dear all,
I read about security lendings of Stocks in the Swissquote magazine. Do you consider it as a Save option for a ‚stable‘ portfolio?

 

[Baptiste Wicht]

Hi

It's generally reasonably safe because there is a form of collateral. Most large brokers are safe in that.

However, there is still an extra risk in that if the shares you are lending are not recoverable, the collateral may not always be your losses if the value increases a lot. But for a stable portfolio (if you mean index ETF portfolio with low risk), the risk is low.
And it also increases your risk if both the borrower and the broker default together (very unlikely).