Institutional Supply Curves in Securities Lending

August 2026, Paper: We study the supply of lendable securities using detailed data from a large global custodian. Contrary to the view that supply in general collateral securities is highly elastic, we document that beneficial owners impose rule-based constraints on lending tied to fees. These policies create stepwise, often inelastic supply curves at the security level. By aggregating fund-level rules, we build stock-level supply schedules and document substantial variation in supply elasticity across securities. This heterogeneity has equilibrium effects: we show that securities with more inelastic supply experience larger fee increases when demand rises. Overall, the results suggest that lending market scarcity stems partly from institutional constraints, even outside the “special” regime.