Earn Interest on your US Stocks!
Stock Lending is Stake’s take on securities lending, a common practice where brokers lend out stocks to financial institutions, in return for a fee. Securities lending has historically allowed high net worth or institutional investors, like fund managers, to earn a bit extra on their portfolios for stocks they already hold. With Stock Lending, Stake makes this possible and shares this extra income with you.
How does Stock Lending work?
- If you opt into Stock Lending, your U.S. stocks are available to be lent.
- Stake matches your stocks with financial institutions that want to borrow them.
- In return, borrowers pay interest. We use this to cover costs, and share a payment with you.
What to expect if your stocks are lent out.
For example, say you hold $1,000 of XYZ Industries shares and are part of the Stock Lending program. There's high demand to borrow this stock, so Stake’s broker is able to lend out all $1,000 of your XYZ Industries shares to ABC Institutional Investor for a year. When the loan begins, ABC Institutional Investor puts aside $1,020 of cash collateral in a separate bank account, for your protection.
ABC Institutional Investor pays interest for the $1,000 of XYZ Industries shares they borrow. After covering the broker fees, Stake receives 10% annualised interest of $100. Most of this is used to cover the costs for Stake to run the Stock Lending program, and you keep the remaining $20 (annualised). Our share of the interest allows us to offer this opportunity to you, and provides us with some additional revenue which helps us continue to provide you with low cost and seamless access to the markets. Those low costs, combined with extra interest from Stock Lending, give Stake customers the opportunity to grow their portfolios a bit more each month.
How do I start lending my stocks?
Stock Lending is currently available for United Kingdom customers who hold U.S. stocks on Stake. If Stock Lending is available in your country, you don’t need to do anything extra to take part: we’ll do all the work to match your stocks with borrowers. You can always check and adjust your Stock Lending preferences in Settings in the Stake app or web platform.
If you no longer wish to have your stocks lent out, we’ve made it simple for you to switch off Stock Lending at any time if you don’t think it’s right for you. When you’re in the Stake app or web platform, go to Settings > Trade settings > Stock Lending settings.
Review the Stock Lending with Stake page to learn more about Stock Lending and its risks.
As with all financial products, stock lending carries risk. Before making any investment decision, please ensure you understand the risks involved, consider if it’s right for you and seek appropriate advice from a licensed financial adviser. You should read our Stock Lending Explained page, Disclaimers, Terms and Conditions, as well as DriveWealth’s Risk Disclosures and the Master Securities Lending Agreement.