An online brokerage is set to introduce a new stock lending program aimed at users in the UK and Europe, providing them with the opportunity to earn passive income by lending out their shares. This initiative involves collaboration with a financial institution that will serve as the custodian, in addition to a stock lending platform responsible for identifying borrowers and managing the lending process.
The program will be implemented gradually, starting with specific premium members of the brokerage and eventually rolling out to lower-tier members. This stock lending feature is seen as a significant step for retail investors, who have historically had limited access to such opportunities, typically reserved for large financial entities. By utilizing advanced global clearing services, the program hopes to democratize stock lending, making it accessible to millions of users.
Participants can opt in to the lending program, at which point they can have their entire portfolio assessed for potential lending. Once involved, they will receive monthly statements detailing their earnings from lent stocks. It’s important to note that only whole stock positions are eligible for lending, meaning that fractional shares and contracts for difference (CFDs) are excluded from this opportunity. Those who lend their stocks will transfer ownership to borrowers temporarily, which means the original owners will lose voting rights but can still receive dividends and sell their shares at any time.
This stock lending venture is part of a broader effort to enhance the cooperation between the brokerage and the custodial bank, leveraging global clearing solutions to provide comprehensive services, including custody, settlement, execution, and financing across various exchanges worldwide.
Industry representatives expressed enthusiasm about this development, highlighting it as a positive advancement in the stock lending market that showcases a commitment to modern financial services. The use of innovative technology and streamlined processes aims to benefit users by providing an efficient and modern financial solution. Overall, this initiative illustrates a trend towards increasing accessibility in investment opportunities for retail traders.