Earn daily interest on your shares
We’re reinventing share lending!
On 05.07.2023, we’ll begin rolling out our new share lending program.
We borrow shares from your portfolio and lend them to borrowers. We then receive interest in exchange.
50/50 profit split. We split all interest equally with you.
Full control. You can disable or enable it anytime with a single tap.
Complete transparency. You see which stocks are lent, your collateral and how much interest you earn.
As always, your lent shares remain secured with US treasuries collateral, adjusted daily.
Why would someone want to borrow shares?
Price is $100 for 1 share. You are Dave. Arrow is a hedge fund.
Arrow borrows 1 share from Dave, paying Dave interest as a lil token of thanks.
Arrow then sells the share straight away for $100. No profit or loss is made.
If price of the share decreases to $50, theory is Dave will sell so will ask for the share back. Arrow buys the share at $50 and gives it back, profiting the $50 difference (thus they have bet on the down-fall of the stock).
If price of the share increases to $200, Arrow will need to buy the share at $200 and give it to you making a loss of $100.
Short selling has infinite downside, limited upside. However, some would argue it’s easier to short a company then long it (I.E. it’s easy to tell that a company is a dumpster fire and will probably destroy itself. But it’s not as easy to say if its going to do great or not)
Downside to you letting your shares be borrowed is if Arrow suddenly cannot buy the shares again (for example, if it’s gone up so much Arrow can no longer afford it),
Hopefully T212 has something in place to protect against this, I am not sure.
The shares are secured by collateral in the form of US treasuries
For buying with leverage too. Or for securing options trading in general, liquidity pools, etc.
If you are holding an S&P500 ETF with Vanguard or iShares, for example, your shares are being lent out. It’s one of the ways Vanguard, Blackrock and many others make money while providing very cheap service.
It’s the first time I see a broker shares 50% of that revenue with us. Hope others will follow.
T212 just announced multi-currency support:
Apparently this applies only for Invest, as ISA must always be kept in pounds.
Last week they also announced they’ll start paying you 50% of the share lending income your stocks generate if you opt in.
Apparently this is bigger news for the apes, that will finally be able to opt out and their precious shares won’t be lent out to the villains.
Aha more choice for the user is often better I guess.
The engineering at T212 is mighty impressive: their AutoInvest is best in class in the U.K., their app is customisable more so that others, offer fractional U.K. shares somehow, and the granularity to even make share lending toggle-able is just wow. Especially, when Freetrade (who I am root for) are only just now launching an inferior version of Autopilot called Recurring Orders.