About the Collateral Loan Service



The Collateral Loan Service allows DTC participants to pledge securities as collateral for a loan or for other purposes, as well as to request the release of pledged securities. These pledges and pledge releases can be made free (i.e., the money component of the transaction is settled outside of the depository) or valued (i.e., the money component of the transaction is settled through DTC as a debit/credit to the pledgor's and pledgee's DTC money settlement accounts).

When pledging securities, security interest in the pledged position is moved from the pledgor to the pledgee, and an accounting entry is made from the pledgor’s general free account to their pledged position, preventing the pledged position from being used to complete other transactions. Likewise, the release of a pledged position would move the pledged position back to the pledgor's general free account, where it would then be available to complete other transactions.