Our Securities Financing for Business program is designed to help your business create an additional stream of cash-flow. It allows you to earn extra income on the fully-paid shares of stock held in your account by activating the Stock Yield Enhancement Program. This plan allows our custodian to borrow shares from you in exchange for cash collateral, and then lend the shares to traders who want to sell them short and are willing to pay interest to borrow them. Each day that your stock is on loan, you will be paid interest on the cash collateral posted to your account for the loan based on market rates. You are paid 50% of the income earned from lending the shares. The program is available to eligible clients who have been approved for a margin account, or who have a cash account with equity greater than $50,000 USD.
Securities Financing for Business
Simple and Automatic
The custodian manages all aspects of share lending. Once you enroll, they examine your fully-paid stock portfolio automatically. If you have stocks that are attractive in the securities lending market, they will borrow the stocks from you, deposit collateral into your account and lend the shares.
When your stock is loaned out, you will see the interest rate that you are being paid on the cash collateral along with the amounts earned by the custodian from lending those shares. Other brokers with similar programs generally do not disclose the market rates to you, which allows them to pay you a small piece of the pie while holding on to most of the profits.
Earn Supplemental Income
Each day that your stock is on loan, the custodian pays interest on the cash collateral directly into your account.
Trade Your Loaned Stock with No Restrictions
You will see the loaned shares on your account statement, indicating that they are being loaned out. You are still the owner of the stock, which means you continue to have market risk and will recognize any profit (or any loss) if the stock price moves. You can sell your shares at any time without any restriction. You can terminate your participation at any time for any reason.
XYZ is currently trading at $75.00/share. You’re long 5000 shares of XYZ, with a market value of $375,000.00. XYZ is in demand and commands a loan interest rate of 9%.
You Could Earn $16,875.00/year on Stock You Already Own
You activate the Stock Yield Enhancement Program, and the custodian loans out your 5000 shares of XYZ at 9%. They will pay interest on your cash collateral of $375,000 x 4.5% = $16,875.00.
Stocks that are eligible to be loaned out are all “fully-paid” stocks (stocks not held on margin) and “excess-margin” stocks (stocks held on margin but whose market value exceeds 140% of your margin debit balance).
To learn more about the Stock-Yield Enhancement Program, talk to your investment manager.
IRA margin accounts allow trading so the account can be fully invested as well as the ability to trade multiple currencies and multiple currency products, but are subject to the following limitations:
- No cash borrowing (i.e. cannot have a debit balance or short stocks).
- IRA accounts may be opened in any base currency, but when trading in a non-base currency product, a currency trade must be executed first as you cannot borrow currencies.
- Withdrawals are permitted only in USD.*
- No stock or option cross-margining.
- No currency borrowing.
- Futures trading in an IRA margin account is subject to substantially higher margin requirements than in a non-IRA margin account. Margin rates in an IRA margin account may meet or exceed three times the overnight futures margin requirement imposed in a non-IRA margin account.
Customers are advised to consult with their adviser and tax specialist for further details on IRA rules and regulations.
Residents of Canada may not open Individual Retirement Accounts.