Morgan Stanley, the lead underwriter for Facebook's initial public offering, has started lending out shares of the social network to short sellers, according to sources who spoke with CNBC.
Morgan Stanley now joins the two other top underwriters, JP Morgan Chase and Goldman Sachs, as a lender of the stock.
Wall Street firms loan out stocks to short sellers, who sell borrowed shares to other investors. If the price declines, the short-seller is able to buy shares to return to the lender for less than his selling price, pocketing the difference.
Until today, Morgan Stanley had not been a lender of Facebook's stock, according to sources.
It is the firm's practice to wait for some period following an IPO underwritten by Morgan Stanley before it begins lending stock for short sales. Prior to today, the firm did facilitate short sales by brokerage customers but it was not a lender of the stock itself.
—Maria Bartiromo contributed to this story.