What is stock loan repo?

A stock loan repo, or repurchase agreement involving stocks, is a financial transaction where one party borrows shares of stock from another party, typically in exchange for cash collateral. The borrower agrees to return the same number of shares at a later date, along with a fee or interest. This arrangement allows the borrower to leverage their position or engage in short selling while providing the lender with a return on their securities. Stock loan repos are commonly used by institutional investors and hedge funds for various trading strategies.