Lend your U.S. stocks and get paid, without lifting a finger.
What is Stock Lending?
Stock Lending is Stake’s take on securities lending – a common practice where brokers lend out stocks held by their customers and collect interest from the borrowers.
But with Stock Lending, you win too. In an Australian first, we're sharing the earnings with you, the stockholders. You won’t need to lift a finger. If your stocks get lent, you’ll get paid.
Payday comes monthly
If a stock you hold is lent out, you receive a Stock Lending Payment (your share of the borrowing fee) in your Stake Wall St wallet, as buying power.
We do all the legwork
Stake connects your stocks to those interested in borrowing them. We manage everything, you just sit back and clip the ticket.
keep trading as usual
Stocks on loan are still yours to sell, realising any gains or losses at any time. Selling will simply terminate the loan.
We’ve partnered with our existing U.S. broker, DriveWealth, who has an experienced Stock Lending team. When there is demand, DriveWealth will borrow your U.S. stocks and lend them out to established banks and institutional investors, in return for interest. DriveWealth only lends to creditworthy Tier 1 and 2 borrowers, and they perform due diligence on those borrowers on an ongoing basis to ensure they remain appropriate counterparties.
There are many reasons financial institutions may want to borrow your stocks, including market making, covering failed trades, meeting margin requirements, or for short-selling and other trading and investment strategies. Our broker DriveWealth must comply with strict legislative requirements set by the U.S. Federal Reserve Board when they borrow your stocks, including for what purposes they can borrow your stocks.
Your stocks are only ever lent out to reputable borrowers, who are reassessed regularly. Stock Lending is an established practice, and borrower defaults are infrequent. In the event a borrower does not return a lent stock, DriveWealth will buy the stock from another party, in order to return it to you. All lent stocks are backed by 102% cash collateral held in a separate bank account, which is set aside to buy your stocks back for you if required. If there is any shortfall between the collateral and what the borrower owes you, they are legally required to reimburse you.
Stocks in your portfolio are assets that can earn you interest, similar to cash sitting in a bank account. Stake is giving customers access to the lending market, typically reserved for institutional investors, so you have the opportunity to make extra monthly income on the U.S. stocks you already hold, without any additional effort.
If your stocks are lent out, you’ll receive a Stock Lending Payment into your Stake account around the 15th of the following month. This is your share (20%) of the fees paid to Stake by the borrower. Our share is used to cover our costs of establishing, managing, and maintaining the Stock Lending program, plus a small margin. Our costs are covered so you can participate in Stock Lending and earn an extra income on your holdings.
Generally, the Stock Lending Payment you receive if your stocks are lent is taxed as ordinary income. This is not tax advice. Consider seeking appropriate advice from a professional tax adviser who will take into account your personal financial circumstances.
No. When you participate in Stock Lending, any U.S. stocks in your Stake Wall St portfolio can be borrowed. The loans will occur automatically – you won’t get notice or be asked to approve each loan. Whether a stock in your portfolio is lent will depend on borrower demand and other market factors. There is no guarantee that any of your stocks will be lent.
Yes. When any of your stocks are on loan, you’ll still be able to see them in your Stake portfolio as usual and trade them without restriction. You can sell your stocks at any time and realise any gains or losses as usual. If your stocks are on loan when you initiate a sell transaction, this will simply end that loan.
In your monthly Account Statement, which can be downloaded from the Stake app or web platform, you’ll be able to view a list of any stocks that were lent in the previous month.
Loans are ended prior to dividend payments, so your stocks won’t be on loan at the dividend record date, and you’ll receive dividends as normal.
To keep things simple, our partner DriveWealth recalls loans before the record date for corporate actions, including votes. This means your stocks won’t be on loan during a vote, so you can participate as normal.
Stock Lending is currently available for all New Zealand and United Kingdom customers who hold U.S. stocks on Stake. It’s not available for Australian customers yet. 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.
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 Wall St section of the Stake app or web platform, go to Settings > Trade settings > Stock Lending settings.