MONTHYLY INCOME?

[rayray]

Okay, for a very long time brokerages made money by lending shares, sometimes "your shares" to short sellers making a nice profit in the process. Your shares were not at risk, so they said, right? Safe until not, I suppose?

Alright, I got a notice from Fidelity that I can earn monthly income from popular owned equities by lending them out to short sellers. A) I still own my share B) I can still sell my shares while out on loan. What's the catch? I'm getting the package in the mail so I can look at it in more detail--I know--in this day and age but it's the way they're doing it.

Transparency or someone else already doing it--I'm assuming this info came to light after the Robinhood fiasco.

Interesting though? The catch is maybe they're passing the risk from themselves the broker to the client, who knows?

Thoughts??

Interesting and always felt that the client should have been getting extra interest if they're shares were "out to loan" to short sellers by their broker.

[fenders53]

I didn't think you could stop them without taking precautions. I thought registering the shares in your name was one method. Now that you bring it up I wonder if rules have changed over the years. With free trades they are going make money by every legal method.

[rayray]

Well, I just got the email. Apparently it's my IPOE stock, they want to lend it out and pay me 18.75% per month. I know the brokers get over 30%, maybe close to 40%.

[rayray]

I still own the stock and can sell it anytime even if it's still on loan. I don't plan on selling it, big believer in sofi.

[fenders53]

(04-13-2021, 11:03 AM)rayray Wrote: Well, I just got the email. Apparently it's  my IPOE stock, they want to lend it out and pay me 18.75% per month. I know the brokers get over 30%, maybe close to 40%.

Maybe they are tightening up on the imaginary short shares?  Sounds lucrative for you.

[rayray]

(04-13-2021, 11:09 AM)fenders53 Wrote:

(04-13-2021, 11:03 AM)rayray Wrote: Well, I just got the email. Apparently it's  my IPOE stock, they want to lend it out and pay me 18.75% per month. I know the brokers get over 30%, maybe close to 40%.

Maybe they are tightening up on the imaginary short shares?  Sounds lucrative for you.

just got off the phone with fidelity, it's like getting a monthly dividend on a non-dividend paying stock

it can be for

a) voting rights

b) shorting

i thought there was a third one but i forget--i got my moderna shot today and i'm tired


it comes to

(amount) x  .1875/360


for example

20 000 x .1875 = 3750

3750/360 = 10.4166

10.4166 x 30 = 312.5 every 30 days

[rayray]

okay i entered the program it's called


Fidelity Investments--Fully Paid Lending Program

any of my investments can be loaned out and i'll get paid a % on the loaned amount

doesn't mean anything will be loaned out

currently ipoe is the only one

under my accounts i now have a "loaned securities" section

this is all new to me but find it fascinating

[rayray]

alright first loan is

19.125%

we'll see how this goes

[crimsonghost747]

Don't expect them to be loaned out for months, especially at those rates. Usually you get a day or two at a time, though of course if there are takers (and there seems to be due to the massive interest rate) then they will likely get loaned again very fast. Most of the time the turnover is extremely fast.

There are two catches.
1. The broker is making fortunes out of this. Good thing fidelity is nice enough to give you a part of it. I know that with IB they keep 50% and they give 50% to the owner of the shares.
2. Those shares are covered by a cash collateral, from what I understand it's deposited at the time the loaning happens. So if you loan them out at $100 per share and the share goes up to $120, then you may (check the paperwork) still only have $100 collateral. This shouldn't be an issue unless the shorter goes belly up. Fidelity may or may not be required to step in if this happens and cover the rest so you have your shares, check the paperwork.

I used a similar program for years, though I am currently unsubscribed due to the gamestop situation.

[fenders53]

(04-15-2021, 09:44 AM)crimsonghost747 Wrote: Don't expect them to be loaned out for months, especially at those rates. Usually you get a day or two at a time, though of course if there are takers (and there seems to be due to the massive interest rate) then they will likely get loaned again very fast. Most of the time the turnover is extremely fast.

There are two catches.
1. The broker is making fortunes out of this. Good thing fidelity is nice enough to give you a part of it. I know that with IB they keep 50% and they give 50% to the owner of the shares.
2. Those shares are covered by a cash collateral, from what I understand it's deposited at the time the loaning happens. So if you loan them out at $100 per share and the share goes up to $120, then you may (check the paperwork) still only have $100 collateral. This shouldn't be an issue unless the shorter goes belly up. Fidelity may or may not be required to step in if this happens and cover the rest so you have your shares, check the paperwork.

I used a similar program for years, though I am currently unsubscribed due to the gamestop situation.

That makes more sense now.  I'd still do it with a small part of my port with a good broker like Fidelity.  They aren't going to allow him to eat it IMO.  What I find the most shocking is shorts think they can pay loan shark rates and win in the end.  Sure they get lucky sometimes.  You don't just need a pullback to win.  You need a crash and you don't have too long to wait for it.  I wonder how much money was lost by fools that missed the TSLA pullback by a year or two?

[rayray]

(04-15-2021, 10:04 AM)fenders53 Wrote:

(04-15-2021, 09:44 AM)crimsonghost747 Wrote: Don't expect them to be loaned out for months, especially at those rates. Usually you get a day or two at a time, though of course if there are takers (and there seems to be due to the massive interest rate) then they will likely get loaned again very fast. Most of the time the turnover is extremely fast.

There are two catches.
1. The broker is making fortunes out of this. Good thing fidelity is nice enough to give you a part of it. I know that with IB they keep 50% and they give 50% to the owner of the shares.
2. Those shares are covered by a cash collateral, from what I understand it's deposited at the time the loaning happens. So if you loan them out at $100 per share and the share goes up to $120, then you may (check the paperwork) still only have $100 collateral. This shouldn't be an issue unless the shorter goes belly up. Fidelity may or may not be required to step in if this happens and cover the rest so you have your shares, check the paperwork.

I used a similar program for years, though I am currently unsubscribed due to the gamestop situation.

That makes more sense now.  I'd still do it with a small part of my port with a good broker like Fidelity.  They aren't going to allow him to eat it IMO.  What I find the most shocking is shorts think they can pay loan shark rates and win in the end.  Sure they get lucky sometimes.  You don't just need a pullback to win.  You need a crash and you don't have too long to wait for it.  I wonder how much money was lost by fools that missed the TSLA pullback by a year or two?

from what i gather reading the contract is that fidelity will replenish the shares if the borrower goes bk, basically i'd be at risk if fidelity went bk

i called fidelity and asked them a few q's and they said fidelity takes loaning securities very seriously and is not lending out to some mickey mouse outfit and they're in business to make themselves and their clients money not lose it blah blah blah

i know some brokers don't give you a dime, i believe robinhood has it in their agreement that they can loan out your shares

yea, i'd assume the turn around is quick


i remember now shares loaned out for

shorting, voting rights and hedging...i couldn't remember the last one


like a bunch of bookies and shylocks lol

[rayray]

https://scs.fidelity.com/webxpress/help/...ties.shtml