Borrowers post collateral to secure the borrowed shares and protect the lender from default risk. In Betterment Securities’ program, this collateral is typically cash. The value of this collateral is marked-to-market daily — meaning it’s adjusted each day to match current market prices. If the market value of the loaned shares rises, the borrower must post additional collateral; if it falls, excess collateral is returned. This daily adjustment process functions like a recalculated security deposit, helping maintain stability and minimize counterparty risk.
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