Fidelity Borrowing Program

Royal Fools,
I wasn’t sure where to ask about this, but I highly respect the opinions on this board so I thought, what the heck. Anyone familiar with this program or one like it? IF so, what do you think? Thanks,

Vince

https://www.fidelity.com/trading/fully-paid-lending

1 Like

Vince,

Interactive Brokers has a similar program, where they give you back some of the cost of borrow when someone shorts shares. In my experience, any money I’ve received from it has been pretty minimal. But not really any specific issues to worry about, etc. And if you’re holding a highly shorted position, (such as GME a couple years ago or maybe HLF way back), you might get some decent scratch out of it. But generally I wouldn’t expect a lot, but it’s a little perk.

Best,

Jim

2 Likes

It is called stock yield program and stopped doing it. You receive a collateral cash for your shares, that is your recourse in an event that the borrower is not able to return the shares. It has not happened to me, and there is a high par for that. Yet, I decided the money I receive from the SY program is not worth the risk.

2 Likes

Quantity on Loan Rate % Collateral Amount $ Accrued Income $
09/09/2022 VXUS 4 0.5227 206.00 0.03
09/08/2022 VXUS 48 0.5226 2,465.00 0.04
09/02/2022 VXUS 12 0.2316 619.00 0.04

I participate in Etrade this will give you some idea of what to expect.

Most of my stocks are boring dividend payers or ETF’s.

1 Like

Vince,

I always participate through my Schwab accounts when given the opportunity. I have apparently been lucky (?) enough to own some heavily shorted stocks in the past and the interest rates they paid me were astronomical, although clearly just short term. Still have made several hundred dollars in a month, but that’s not that difficult when rates were in the 30 and 40% range.

For example Dutch Brothers (BROS) is a coffee chain that was started here in Oregon down I-5. Bought shares shortly after their IPO because every person I knew under 25 raved about them. Anyway they were heavily shorted this past summer and Schwab borrowed my shares. I just checked my account and they paid me $49 in May, $114 in June, $379 in July, $341 in August and sadly returned the shares back to my account recently in September. Schwab provides insurance against losing the shares in any way.

Couldn’t really see any downside and wish they would borrow more of my stocks! They do only borrow in even 100 share lots. Rates were so high this past summer that I bought another 50 shares of BROS during one of the short attacks so I could get to another even lot! Of course I did still want to own the company.

Just my 2 cents

David

4 Likes