Interactive Brokers sent me an email informing me about the IB’s Stock Yield Enhancement Program, according to which I can opt in to lend the fully-paid shares of stock held in my trading account so that I earn extra income. Although not all IB customers are eligible for this program, I did find out that I can tick the appropriate box in my account management. Traders over at Elitetrader.com had trouble finding that selection since it became available only today. Login to your Interactive Brokers account, find the Trading Configuration under Trading Access section and check out the last selection in the list of Trading Permissions.
Interactive Brokers manage the lending and the whole service all by themselves and as a trader I don’t need to do anything, in order to get paid my lending fee. Of course that comes at a price, which equates to sharing the profits with IB. IB management fee for the Stock Yield Enhancement Program is 50% but we are discussing about an extra income that traders couldn’t earn otherwise. Stock traders, willing to participate into the program, need to be aware of some considerations and risks regarding the stock lending program, such as SIPC protection, tax consequences and voting rights.
The loan fee rate depends on the securities lending market and the demand for the stock you wish to lend. The loan income is calculated as an annual return rate and in the example of Interactive Brokers a trader holding $250,000 worth of shares will earn $3,750 per year.
Read more about the IB Stock Yield Enhancement Program at the product highlights’ page or the Securities Lending Program Disclosure.