How does Stock lending work?
When you activate Stock lending, we will work to borrow stocks and ETFs from your account and lend them to third parties. You will receive payment for any stock we lend out, and we will post collateral during the duration of the loan to minimise your risk.
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Note: You continue to retain the market risk of price fluctuation for your stocks on loan, just like you would if you didn’t lend 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 Stock lending?
You can activate or deactivate Stock lending in the platform by clicking here or by following the steps below:
- SaxoTrader: click Activate Stock lending
- SaxoInvestor: click Activate Stock lending
Where do I view my lent out stocks and ETFs?
- Go to the Portfolio area.
- If you have already activated Stock lending, you will see the Securities lending option.
- Click View to check if any of your securities are lent out.
How do I cancel Stock lending?
- Go to the Portfolio area.
- If you have already activated Stock lending, you will see the Securities lending option.
- Click View.
- Here you will find a link to cancel Securities lending.
How much can I earn by activating Stock lending?
If Saxo lends out a stock for you, the revenue that you receive will fluctuate because of prevailing market conditions. You’ll always be able to see which stocks are on loan and how much revenue (if any) 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.
Am I eligible to activate Stock lending?
All new and existing clients of Saxo Bank A/S can activate Stock lending on their accounts.
Am I provided with collateral for lending my stocks to Saxo?
Yes. For any stock that Saxo borrows from you, Saxo will provide you with collateral in accordance with the applicable regulations.
For example, Saxo will provide you with collateral worth at least 102% of the market value of the loaned securities (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).
What are some of the risks involved with Stock lending?
When you enable Stock lending, you still assume the risk of the market value of any stocks/ETFs lent out. So, if the price of your lent-out stock gains or declines, that will be reflected in your account value, just as it would be if the stocks were not lent out.
If Saxo Bank were to enter into bankruptcy or become insolvent, the client also bears the economic risk that in the period from the bankruptcy to the distribution of collateral by the collateral agent, there is a possibility that the value of the open loan has increased to exceed the collateral provided.
Please read more about Stock lending in our Terms and Conditions.
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. This means that it is possible you may not earn any revenue through Stock lending.
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 are unable to choose to only make certain securities available for lending.
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.
Can I see which stocks or ETFs Saxo lend out for me?
Yes, you’ll be able to see which stocks and ETFs (if any) are on loan and what revenue (if any) you received.
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 stock that Saxo has borrowed from you (i.e. if the price of your stocks increases or decreases while the stocks are lent out to Saxo, then the value of the stocks which you will receive upon the termination/expiry of the loan will increase or decrease accordingly).
Can I still receive dividends on loaned stocks?
Yes, you receive payments equivalent to applicable dividends or distribution on stocks while they are lent out.
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.
Can I reactivate again in the future after I have deactivated Stock lending?
Yes, you can reactivate Stock lending again even after deactivating previously.
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 102% 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).
What happens if any of the loaned stocks are subsequently halted from trading?
In such an 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.
How is the revenue split reflected in the reports?
We split the revenue derived from lending out your stocks 50/50. This extra income is deposited into your account at the end of each month and can be viewed in the Stock Lending dashboard on the platform. Although we can't guarantee the lending of shares or the revenue generated from it (as it depends on market demand), we handle the lending process for you, creating a mutually beneficial arrangement.
The 50% of the revenue not received by you will be shown as a cost and will be displayed in your Cost summary in both the Portfolio report and the Annual cost report when stock lending is activated. It will be listed under Financial instrument cost as Ongoing costs, in compliance with regulatory requirements following the ESMA statement on securities lending. This cost is indirect, meaning it is not directly charged or withdrawn from your cash balance, nor does it appear under transactions.