4 ms·
This only applies if you have a margin account, right?
by gibybo 7y ago
This only applies if you have a margin account, right?
- bdonlan 7y agoYour shares can only be lent if you have a margin account and have a negative cash balance (or collateral placed with other parties in excess of your cash balance), or if you have opted into a securities lending program like the one at IB.
- scurvy 7y agoI've seen this oft repeated bit about only margin account holdings can be lent out to shorts. Do you happen to know the regulation or law that says this is the case? Or is this another instance of drinking 8 glasses of water a day?
- Scoundreller 7y agoNo, this is about lending stock you own to short sellers because they’re not supposed to short naked.
- koolba 7y agoNo you can only lend out the securities of clients that are themselves on margin or have an explicit borrow agreement (which grants you a kickback of the money made from the stock loan). Cash accounts without a margin balance cannot be lent out.
- Scoundreller 7y agoOk, but where do my holdings in a mutual fund or ETF fit?
- koolba 7y agoETFs are treated like stocks. That's kind of the point. They can be lent out by your broker if you're on margin. Mutual funds are opaque. It's up to the fund to decide if they want to make some extra money lending their securities out to speculators. As they're holding the stocks long term and standard securities lending is over collateralized, the risk profile is relatively low compared to the extra return.
- H8crilA 7y agoNo, they often lend out from cash accounts.