Securities Lending Income Program
- What is the Securities Lending Income Program?
The Securities Lending Income Program provides you the opportunity to lend securities in your portfolio and earn additional income on them. Your securities will be lent out if there is a high borrowing demand for them (generally due to short selling, scarce lending supply, or corporate actions).
- How do I earn income on my lent securities?
You will only earn income if your securities are eligible to be lent out. Your securities will be eligible for lending only if there is a demand for the stock/ETF in the lending market. The amount of income earned depends on the borrowing interest rate and the demand of the particular stock in the securities lending market. Income earned from lent securities accrues daily and is credited to your account monthly. If shares are lent out, you earn 10% of the total income generated from the interest. VF Securities and our clearing firm share in the rest. Your proportion can change at any time without prior notice.
- Can I sell my stocks if they have been lent out?
Yes, there are no trading restrictions on stocks that are lent out. You can sell your stocks at any time, just as you would if they weren’t on loan.
- Where do I see income earned from the Program?
All interest earned on your securities that have been lent out will be available in your monthly Account Statements, which are generated once a month and can be accessed through your Profile.
- Do I receive Dividends on my stocks that have been lent out?
Yes. When lending the security, you still own the security outright and all associated economic interest, both from the movement in stock price and through dividend payments.
- Are my lent securities covered under Securities Investor Protection Corporation (SIPC) insurance?
No, stocks/ETFs that have been lent out are not covered under SIPC insurance. However, to secure the loan, cash and non-cash collateral (as per the Securities Exchange Act of 1934 and related SEC and FINRA guidance) will be held for your benefit at a custodial bank that is independent of our clearing partner, DriveWealth. The value of the collateral held is equal to 102% of the daily marked-to-market value of your lent securities.
- How do I enroll or revoke my enrollment from the Program?
You can enroll or revoke enrollment from the Profile options for your account, through the Vested app. On choosing to revoke enrollment, you will cease to earn any further interest on securities eligible for the Program, and there may be restrictions on rejoining the program for a particular duration.
- I do not see the option to enroll into the Program on my Profile options?
Only All Access Accounts on Vested are eligible to enroll in the Securities Lending Income Program. You can update your existing Classic Vested Account to an All Access Account from your Profile options.
You can find more information on our Risk Disclosures with respect to participating in Fully Paid Securities Lending transactions here, and our Master Securities Lending Agreement for Fully Paid Securities Lending here.