The Securities Lending Income Program provides you with the opportunity to earn extra income on fully-paid shares of stock held in your cash account. While your shares are on loan, you will be paid an income that is accrued daily and credited to your account on a monthly basis.
What is fully-paid securities lending?
Clearing firms commonly lend stock to other financial institutions, through the securities lending market, as a means to facilitate short selling, meet collateral requirements, and other settlement purposes. The Securities Lending Income Program allows eligible customers to lend certain fully-paid stocks to Firstrade’s clearing firm, Apex. In return, the customer will gain the opportunity to increase income on their portfolio through the securities-based lending market.
Benefits of fully-paid lending
Earn extra income
You will immediately begin earning income on any shares that are lent out. Earnings are accrued on a daily basis.
Easy, hassle-free and automatic
Stocks in your account identified as in-demand by the securities lending market will automatically be loaned out and processed by Apex.
Everything will be taken care of for you.
No commitment necessary
You may discontinue participation in this program at any time.
When the lending transaction takes place, our clearing firm will hold the collateral for you to secure the amount of the loan. For more details, please review the Important Disclosures Regarding Risks and Characteristics of Participation in Apex Clearing Corporation’s Fully-Paid Securities Lending Program document.
No restrictions! Sell your stock anytime
There are no restrictions on when you can sell your stock. You retain full economic ownership of the securities you have on loan and may sell the shares at any time. Selling your shares will terminate the loan transaction.
- A Signed Master Securities Lending Agreement (MSLA) is required.
The MSLA describes the rights of all counterparties and rules of the loan transactions.
- Only fully-paid securities in your cash account are eligible
- The Securities Lending Income Program is only available to qualified accounts. Please contact our customer service department
via email or call 1-800-869-8800 for more details.
- The loaned securities are not eligible for SIPC protection. (You will receive cash collateral at 102% rounded up to the nearest dollar held by Firstrade’s clearing firm, Apex Clearing).
- Loan incomes are taxed at ordinary 1099 income rates and not qualified for capital gain rates. The loan income will be accrued daily and credited within fifteen (15) business days following the last business day of the calendar month.
- You will receive cash payments in lieu of dividends. These payments
will be taxed at your marginal tax rate (rather than the prevailing
dividend tax rate).
- The customer will lose the voting rights on loaned securities.
- Loans may be terminated at any time by Firstrade’s clearing firm.
- There is no guarantee that your fully-paid shares will be loaned out.
Master Securities Lending Agreement (MSLA)
Frequently Asked Questions (FAQs)