Stock Yield Enhancement ProgramStock Yield Enhancement Program
Stock Yield Enhancement Program
Earn extra income by lending fully-paid shares of stock.
Program Overview
Earn extra income on the fully-paid shares of stock held in your account by allowing IBSJ to borrow your shares. IBSJ then lends the shares to traders who want to sell them short and are willing to pay interest to borrow them.
Each day that your stock is on loan, you will be paid income on the loan value for the loan based on market rates.
IBSJ pays you 50% of a market-based rate.1
The program is available to eligible IBSJ clients who have been approved for a margin account, or who have a cash account with a liquid net worth greater than JPY 4,000,000 (or equivalent).
Note that Japanese listed stocks will initially be excluded from this program.
Benefits
Simple and Automatic
IBSJ automatically manages all aspects of share lending. After you enroll, IBSJ will borrow any stocks you hold that are attractive in the securities lending market, and lend the shares.
Complete Transparency
When your stock is loaned out, you will see the income rate that you are being paid on the loan value along with the stock's market-based rate.1 Other brokers with similar programs generally do not disclose the market rates to you, which allows them to pay you a small piece of the pie while holding on to most of the profits.
Earn Supplemental Income
Each day that your stock is on loan, you will be paid income on the loan value based on market rates.
Trade Your Loaned Stock with No Restrictions
You remain the owner of the stock, which means you continue to have market risk and will recognize any profit (or loss) if the stock price moves. You can sell your shares at any time without restriction and can terminate your participation at any time for any reason.
Example:
XYZ is currently trading at USD 75.00/share. You are long 5,000 shares of XYZ, with a market value of USD 375,000.00. XYZ is in demand and the market-based rate is 9%.
You sign up for IBSJ's Stock Yield Enhancement Program and IBSJ borrows your 5,000 shares of XYZ. IBSJ will pay you income on the loan value of USD 375,000.00 x 4.5% = USD 16,875.00.
You could earn USD 16,875.00/year on stock you already own.2
Eligibility
The Stock Yield Enhancement Program is available to eligible IBSJ clients who have been approved for a margin account, or who have a cash account with a liquid net worth greater than JPY 4,000,000 (or equivalent).
Stocks that are eligible to be loaned out are all "fully-paid" stocks (stocks not held on margin) and "excess-margin" stocks (stocks held on margin but whose market value exceeds 100% of your margin debit balance).
Note that Japanese listed stock will initially be excluded from this program.
Considerations and Risks
Shares loaned out are typically used to facilitate short sales.
Shares are attractive in the stock loan market because other traders want to borrow and sell them short, possibly affecting the value of the shares.
Loan rates change frequently.
These rates and the income you will receive may go down (or up) by 50% or more.
Loans may be terminated at any time by IBSJ.
Also, IBSJ does not guarantee that it will lend all eligible shares.
Voting rights go to the borrower.
During any period in which your securities are loaned out, you will forfeit your right to vote those shares by proxy.
Selling your shares or borrowing against them or withdrawing cash in a margin account will terminate the loan transaction.
If you sell the fully paid shares that have been lent out, or if you borrow the shares or withdraw cash in a margin account (such that the securities become margin securities and are no longer fully paid or excess margin securities) the loan will terminate and you will stop receiving loan income.
You will receive Dividend Equivalent Payment from IBSJ
If there is a dividend payment when your stocks are lent out, IBSJ will pay you cash in lieu of dividend, net any applicable foreign and/or domestic withholding taxes.
Note that the Japanese tax treatment for payments in lieu of dividends is different than the tax treatment of an actual dividend payment; please confirm your tax reporting obligations yourself.
USER GUIDES
Get Started with the Stock Yield Enhancement Program
For more information on using the Stock Yield Enhancement Program, select your trading platform.
For More Information
- For a complete discussion of the risks and characteristics of the program, click here (English only).
- Sign up for IBSJ's Stock Yield Enhancement Program on the Account Settings configuration table in Client Portal.
- For more information, see our FAQ page.
The Best-Informed Investors Choose
Interactive Brokers
With IBKR's Stock Yield Enhancement Program, clients can earn additional income by lending their fully paid shares. Thousands of investors boost their portfolio returns while remaining able to trade their shares with no restrictions.
Disclosures
- The market-based rate is determined by taking into account the rates on shares IBKR has loaned to or borrowed from others, and third-party market data.
- Indicative.