How does Stock Lending work?
When you activate Stock Lending, we will work to borrow stocks from your account and lend them on to third parties. You will receive payment for any stocks we lend out, and we will post collateral during the duration of the loan to minimise your risk.
Note: You continue to retain the market risk of price fluctuation for stocks on loan, just as you would if you didn’t lend out those stocks. In addition, you continue to retain the right to sell your stocks at any point, irrespective of the loan.
How do I activate, or deactivate, Stock Lending?
You can activate Stock Lending during the sign-up process or later in your account settings.
If you already have an account, you can activate or deactivate Stock Lending in the platform:
or by following the steps below:
Go to the menu > Your account > Earn more with Stock Lending, accept the terms and conditions and submit.
You can also go to the Portfolio page to click on the banner for more information.
How much can I earn by activating Stock Lending?
If Saxo lends out a stock for you, the revenue which you receive fluctuates because of prevailing market conditions. You’ll always be able to see which stocks are on loan and how much revenue you earn.
The revenue from Stock Lending accrues for each day that the stocks are borrowed from you, and is paid out to you monthly, in the currency of your main account.
It is possible that Saxo does not lend out any of the stocks on your account, and therefore you may not receive any revenue by activating Stock Lending. No lending or revenues are guaranteed by activating.
More about Stock Lending
1. Am I eligible to activate Stock Lending?
All clients of Saxo Markets HK can activate Stock Lending on their accounts.
2. Am I provided with collateral while lending my stocks out?
Yes. For any stocks that Saxo lends out for you, Saxo will provide you with collateral in accordance with the applicable regulations.
For example, Saxo will provide you with collateral worth at least 100% of the market value of the loaned stocks (which are marked to market every business day). Such collateral is segregated from Saxo’s own money/assets and is therefore excluded from the money and assets of Saxo available to Saxo’s creditors (in the unlikely event of Saxo’s insolvency).
3. What are some of the risks involved with Stock Lending?
Please refer to the Risk Warning for Stock Lending here.
4. Will Saxo lend out all my eligible stocks?
Not necessarily. There may be little or no demand to borrow your stocks. Certain assets are in greater demand than others, and this demand will fluctuate over time. Across your portfolio, you may find, for instance, that most of the assets you hold do not command a lending fee at any point in time. Therefore, it’s possible you may not earn any revenue through Stock Lending.
5. Can I choose which stocks to make available for lending?
When you activate Stock Lending, all eligible stocks in your account become available for lending. You cannot choose to only make certain stocks available for lending.
6. Why would third parties want to borrow my stocks?
There are several reasons third parties may borrow stocks. For instance, they may want to hedge their existing positions, to short markets in which they don't own any shares, or to borrow assets to meet a demanding delivery deadline.
7. Can I see which stocks Saxo lends out for me?
Yes, you’ll be able to see which stocks (if any) are on loan and what revenue (if any) you have received.
8. Can I sell loaned stocks?
Yes, you can always sell your stocks. If you sell a loaned stock, the loan terminates.
Note that you continue to maintain market risk on any stocks which Saxo has lent out for you (i.e. if the price of your stocks increases or decreases while the stocks are lent out, then the value of the stocks which you will receive upon the termination/expiry of the loan will increase or decrease accordingly).
9. Can I still receive dividends or coupon income on loaned stocks?
Yes, you receive payments equivalent to applicable dividends or distribution on stocks while they are lent out. You should consult a tax advisor regarding any potential tax implications of such payments.
10. Can I exercise voting rights and attend shareholder meetings for loaned stocks?
While your stocks are lent out, you do not retain rights to vote or attend shareholder meetings (as applicable). These rights will be reinstated to you if the loan for the stocks has terminated, or if you deactivate Stock Lending.
11. Can I reactivate again in the future after I have deactivated Stock Lending?
Yes, you can reactivate Stock Lending again even after deactivating previously.
12. What will happen to my loaned stocks if the borrower defaults or Saxo is liquidated?
Saxo is the borrower of your stocks. If Saxo borrows stocks from you, Saxo will provide you with collateral worth at least 100% of the market value of the loaned stocks (which are marked to market every business day). Such collateral is segregated from Saxo’s own money/assets and is therefore excluded from the money and assets of Saxo available to Saxo’s creditors (in the unlikely event of Saxo’s insolvency).
13. What happens if any of the loaned stocks are subsequently halted from trading?
In such event, Saxo will terminate the loan and return the loaned stocks to you. If Saxo is unable to return the loaned stocks to you, Saxo will provide you with a cash payment equivalent to the applicable market value of the loaned stocks.