Securities Lending: A financial transaction wherein a lender, usually an individual or institution, such as a bank or hedge fund, loans stock to another entity, typically a short-seller who can then turn around and sell it in the open market. Once the loaned securities are sold, the short-seller must purchase them back to return to the lender at a later date. This activity plays an important role in mitigating risk in the securities market and providing liquidity to traders of all types.