Tesla chief Elon Musk has taken a swipe at the securities lending market, hours after mocking the Securities and Exchange Commission (SEC) by calling it the "Shortseller Enrichment Commission".

“There is no rational basis for a long holder to lend their stock to shorts, as it dilutes the shareholder base & gives the short a strong incentive to attack the company by whatever means possible, including regulators,” Musk wrote on social media on October 4.

“The big funds can & will, as they’re suffering a net loss. Index managers like Blackrock pocket make excessive profit from short lending while pretending to charge low rates for “passive” index tracking.

“Where this breaks down is in passive index funds, which constitute most of the market. The holders of those funds, mostly small investors & retirement funds, don’t realize that their stocks are being lent to short sellers, diminishing their true equity return.”

A spokesperson for BlackRock declined to comment on Musk's allegations.

Nasdaq-listed Tesla, which makes electric cars, was the largest equity short in the US market in the second quarter of 2018 and holders of Tesla stock generated $76 million from lending, according to IHS Markit. 

Last weekend Musk agreed to step down as Tesla chairman and pay a $20 million (£15 million) fine over tweets that he had funding to take Tesla private.

The Tesla boss has since mocked the Securities and Exchange Commission (SEC) which handed out the fine, calling it the "Shortseller Enrichment Commission".

BlackRock has a range of mutual funds and exchange traded funds participating in securities lending in numerous markets worldwide.

The US asset manager made $183 million (£134 million) from lending out a wide range of stocks and bonds globally in the second quarter of 2018.

It also has its own proprietary securities lending infrastructure – meaning lending is done in-house instead of being outsourced to an agent.

In a note to clients last year, the firm said it sees securities lending as "an additional, relatively low-risk way for investors to unlock the full potential of their portfolio".