Securities Financing

Stock Yield Enhancement Program

Earn extra income on the fully-paid shares of stock held in your account by joining IBKR's Stock Yield Enhancement Program. This plan allows IBKR to borrow shares from you in exchange for cash collateral, and then lend 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 interest on the cash collateral posted to your account for the loan based on market rates.

Benefits

Simple and Automatic

IBKR manages all aspects of share lending. Once you enroll, IBKR will examine your fully-paid stock portfolio automatically. If you have stocks that are attractive in the securities lending market, IBKR will borrow the stocks from you, deposit collateral into your account and lend the shares. It's that simple.

Complete Transparency

When your stock is loaned out, you will see the interest rate that you are being paid on the cash collateral along with the amounts earned by IBKR from lending those shares. 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.

Example:

XYZ is currently trading at $75.00/share. You're long 5000 shares of XYZ, with a market value of $375,000.00. XYZ is in demand and commands a loan interest rate of 9%.

You Could Earn $16,875.00/year on Stock You Already Own

You sign up for IBKR's Stock Yield Enhancement Program, and IBKR loans out your 5000 shares of XYZ at 9%. IBKR will pay interest on your cash collateral of $375,000 x 4.5% = $16,875.00.

Eligibility

The Stock Yield Enhancement Program is available to eligible IBKR clients¹ who have been approved for a margin account, or who have a cash account with equity greater than 50,000 USD.

Considerations and Risks

• Shares loaned out may not be protected by SIPC
  The Securities Investor Protection Act of 1970 may not protect shares loaned out. This is why under SEC rules IBKR must provide you with cash collateral in the same amount as the value of your shares to protect you in the very unlikely event that the stock is not returned to you.
• 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.
• Potential adverse tax consequences from receiving cash Payments in Lieu of Dividends on loaned shares for US taxpayers
  When you lend stocks, you receive the full equivalent of all dividends. However, during the period of the loan any cash you receive "in lieu of" dividends is treated as ordinary income that is not eligible for the lower rates that apply to qualified dividends. IBKR will try to return shares to you prior to a dividend to reduce or avoid any potential tax consequences.

For More Information

• For a complete discussion of the risks and characteristics of the program, click here.
• Sign up for IBKR's Stock Yield Enhancement Program on the Trading Configuration or Trading Permissions page in Account Management.

Availability List

IBKR clients who only execute through IBKR, but do not use IBKR as their clearing broker or custody agent ("Non-Clearing Customer"), may click here for a list of valid Market Participant Identifier (MPID) codes to be entered with their short sale orders.