Start Earning Extra Income
Earn Interest on Your Eligible Stock Positions
TradeStation Securities, Inc.
What is fully paid stock lending?
TradeStation’s Fully Paid Stock Lending Program gives you an opportunity to earn incremental income on your portfolio’s eligible stock positions. When we lend out certain fully paid or excess margin securities in your account, you’ll receive a share of the interest we earn each day.
Generate incremental income
While your shares are on loan, you’ll accrue daily interest, which is paid to your account once a month, in addition to the value of any dividend payments.
No long-term commitments
You can sell your securities on loan at any time. If you wish to stop participating in the program, you’re able to unenroll at anytime
Loans are secured
Rest easy knowing your securities on loan are backed by US dollar collateral held on your behalf, by a third-party collateral agent and secured party, in a separate bank account for your benefit.
Tax considerations
You’ll receive cash payments in lieu of dividend payments while your securities are on loan. Although dividends from your securities are taxed at a different rate.
Here’s how the Fully Paid Stock Lending Program works
When we lend out certain fully paid or excess margin securities in your account, you’ll receive a share of the interest earned each day. The interest rate is determined based on the demand in the lending market and the value of the security. The greater the demand for your securities, the higher your potential income.
See for yourself
Here is a hypothetical example of how the interest is calculated. The income earned is calculated on a daily basis by taking the market value of the position multiplied by the interest rate on a daily basis.
| Shares on loan | 1,000 |
| Market price | $4 |
| Market value | $4,000 |
| Annualized lending interest rate* | 22.5% |
| Annualized return | $900 |
| Daily Accrual ($4,000*22.5%/360 days) | $2.50 |
| Hypothetical monthly income ($2.50 x 30 days/month) | $75 |
| BXYL | |
| Shares on loan | 1,000 |
| Market price | $1 |
| Market value | $1,000 |
| Annualized lending interest rate* | 27% |
| Annualized return | $270 |
| Daily Accrual ($1,000*27%/360 days) | $0.75 |
| Hypothetical monthly income ($0.75 x 30 days/month) | $22.50 |
| RIOT | |
| Shares on loan | 1,000 |
| Market price | $3 |
| Market value | $3,000 |
| Annualized lending interest rate* | 9% |
| Annualized return | $270 |
| Daily Accrual ($3,000*9%/360 days) | $0.75 |
| Hypothetical monthly income ($0.75 x 30 days/month) | $22.50 |
Ready to get started?
If you’re sitting on stock or ETF securities, fully paid securities lending could be an investment strategy to consider. It could add extra income to your portfolio — with little to no effort on your part.
Frequently Asked Questions
Who is eligible for Fully Paid Stock Lending Program?
The Fully Paid Stock Lending Program is available to all TradeStation clients who meet the following criteria:
- A minimum of $25,000 in total net worth OR one (1) year of trading experience
- An equities account (excluding custodial)
- A Master Securities Lending Agreement (MSLA) and related schedules and disclosures. Have questions about your eligibility? Contact Client Services at 800.822.0512 or 954.652.7900.
How do I enroll?
All newly qualified clients are automatically enrolled in the program. Clients who opened an account before 2/15/19, visit the Client Center to enroll in the program. For existing clients whose eligibility criteria has changed, please complete and submit the Client Information Update form and then visit the Client Center to enroll.
How does it work?
- We identify securities in your account that qualify for lending.
- Based on market demand, some or all of your eligible securities will be loaned out.
- You’ll accrue daily income while your securities are on loan.
- Once securities on loan are sold or if the loan is recalled, income stops accruing to your account on that loan.
- All securities on loan and accrued interest will be reflected in your monthly statement.
- There’s no guarantee that there will be demand for your securities, therefore your portfolio’s eligible securities may not be lent out.
Are there trading restrictions?
There are no trading restrictions on securities that are loaned out. You can sell or transfer your positions at any time, just as you would if they weren’t on loan. As required, shares will be recalled and deposited back into your account.
What Are the Risks?
Shares lent out are not protected by SIPC.
Tax considerations:
- When shares are lent out, you’ll receive cash payments in lieu of dividends; these payments are treated as ordinary income rather than taxed at the dividend rate.
- Loan income is taxed as ordinary income.
There’s no guarantee that your portfolio’s eligible securities will be lent out, as there may be no demand for the securities.
When securities are on loan, you lose your ability to exercise voting rights. Other risks are outlined in the Fully Paid Stock Lending Risk Disclosures.
