Ways to raise liquidity, compared.

There are four main ways to raise liquidity from a securities portfolio: a Lombard loan, an outright sale, a brokerage margin loan, or a hedge such as a zero-cost collar. They differ in whether you keep the position, the recourse you take on, how fast they move, what has to be disclosed, and how the proceeds can be used. No single route is best; the right one depends on your objective.

Four ways to raise liquidity

Every holder of a substantial position faces the same question at some point: how to turn part of it into cash. The instinctive answer — sell some — is only one of four, and often not the best. The others keep the position in place to different degrees and for different reasons. Understanding what each route does, and what it costs in control and obligation, is the difference between a decision and a reflex.

Route 1: Lombard loan

A Lombard loan advances cash against a pledge of the portfolio. You keep ownership, the dividends, the voting rights, and the upside; you draw a fraction of value — the loan-to-value — and repay over an agreed term. The recourse profile is negotiable, custody is with a qualified custodian, and no disposal occurs. It is the route for a holder who wants liquidity and wants to keep the position, including a concentrated or restricted one.

Route 2: Outright sale

A sale is the most complete form of liquidity: it converts the position fully into cash, with no interest and no ongoing obligation. But it ends the position, hands the future upside to the buyer, and is a disposal — which may crystallise tax and, for a large or insider holding, may have to be signalled to the market. A sale is cleanest when you have no reason to keep the shares and no tax or disclosure cost to realising them. The trade-off against borrowing is set out on borrow against shares without selling.

Route 3: Brokerage margin loan

A margin loan lends against the securities in a brokerage account. It is quick and flexible for an active trader, but standardised: it is full-recourse, open-ended, and marked continuously against the broker's maintenance requirements, so a fall in the collateral can bring a margin call or forced sale at short notice. It keeps the position, but on terms the borrower does not control. The differences from a Lombard loan are drawn out on Lombard vs margin vs stock loan.

Route 4: Zero-cost collar or hedge

A zero-cost collar is not a loan at all — it is a hedge. It brackets a share price by buying a downside put and selling an upside call, structured so the premiums roughly offset. It protects against a fall while capping the gain, and by itself raises little or no cash. Its role in a liquidity plan is indirect but useful: by protecting the collateral, a collar can support a higher advance on a loan against the same position. Think of it as risk management that can unlock, rather than deliver, liquidity.

The four routes, compared

The table sets the routes side by side across the dimensions that decide between them. Read it as a framework, not a recommendation — the right choice depends on your objective, your holding, and your tax and disclosure position.

Framework only. Not investment, legal, or tax advice, and not an offer. Disclosure and tax outcomes depend on the jurisdiction, the holding, and your circumstances.

Which route fits when

Reduced to essentials: sell when you want out and can bear the disposal; take a margin loan when you are an active trader comfortable with continuous margining; use a collar when protection matters more than cash; and take a Lombard loan when you want liquidity while keeping a position — especially a concentrated, restricted, or strategically important one. The routes also combine, and the best answer is sometimes a blend. For the amount a loan could raise, see how much you can borrow against shares; for what it costs, see Lombard loan interest rates and costs.