Loanable securities, i.e., securities that are held by brokerage firms or in a margin account on behalf of clients and can be loaned or pledged to secure a loan through hypothecation. By nature, free stock is fully paid for and is not assigned as collateral.

Free stock may also refer to stock that is held by an issuer following a private placement but that, unlike a letter security, can be traded free of the restrictions whereby it cannot be sold in the public market.