Utilization Can Be Low While Borrow Is Effectively Scarce
Low utilization is often interpreted as a sign of excess supply. This interpretation assumes that the reported lendable pool reflects the true universe of available shares.
In reality, the lendable pool itself can be artificially constrained. Inventory may be withheld, internalized, or restricted to preferred counterparties. When this happens, utilization remains low even as borrowers struggle to source incremental supply.
Scarcity does not always announce itself through headline metrics. Sometimes it is visible only to those directly negotiating borrow.
