About Stock Lending | Robinhood

About Stock Lending

Stock Lending gives you the opportunity to earn extra income on stocks you already own. After you enable Stock Lending, if we borrow your stock, you’re paid monthly for the loan. If your stocks are on loan, you can still sell them at any time and realize gains or losses as you would otherwise.

Who is eligible for Stock Lending?

To be eligible for Stock Lending, you need to have one of the following:

  • At least $5,000 in total account value
  • At least $25,000 reported income
  • Some trading experience
Keep in mind

If your account is flagged for pattern day trading (PDT), you aren't eligible to have Stock Lending enabled until you’re no longer flagged as a pattern day trader. For details, check out Pattern day trading.

How to enable or disable Stock Lending

  1. Go to Account → in the app, select Menu
  2. Select Investing
  3. Select Stock Lending or View Stock Lending
  4. Select Settings (gear icon), and then toggle the setting On or Off for the account you want to enable or disable it for

Why do financial institutions want to borrow my stocks?

Financial institutions and other market participants borrow stocks to facilitate trade settlements and short selling, which is why stocks with low market availability and high demand are more likely to be borrowed.

How do I get paid through Stock Lending?

When we borrow shares of a particular stock from your account on a given day, you’ll earn whichever of the following earns you more money: A rebate that is 15% of the weighted average rebate rate we earned by lending that stock to borrowers on that day. Or $.01 for your total position in that stock that was borrowed during that month. This would be your share of the rebates Robinhood earned for that stock on that day (across Robinhood's introducing broker and clearing broker).

To see how much money you’ve made through Stock Lending, check your brokerage account statements or go to Account → in the app, Menu (3 bars) → InvestingView Stock Lending.

Keep in mind

Your income from Stock Lending will likely vary from month to month. You’re more likely to earn money when there’s high market demand and low market availability for the stocks you own.

Can I choose which stocks to lend out?

At this time, you can’t select which stocks to lend out. If you enable Stock Lending, your entire equities portfolio will be considered for lending.

Can I sell my stocks when they're on loan and will this affect my returns?

You maintain economic ownership of your stocks and can sell them at any time. The value of your stocks isn’t fixed to the price based on which they’re loaned and may go up and down. If you decide to sell your shares, you’ll realize any gains or losses on them.

How do dividends work for stocks on loan?

Stocks on loan can still earn dividends—the resulting amounts are just paid out and taxed differently.

If your stocks are on loan, you’ll still receive cash equal to any dividends earned—it’ll just be passed to you from the borrower through Robinhood, not the issuer of the stock. These payments are often referred to as cash in lieu of dividends or manufactured dividends. Manufactured (nonqualified or ordinary) dividends are shown on your brokerage account statements as Manufactured Div. instead of Cash Div.

  • Qualified dividends qualify for the lower 15% tax rate applied to long-term capital gains.
  • Manufactured dividends (nonqualified or ordinary dividends), same as stocks held short term (less than 1 year), don’t qualify as capital gains and are taxed as ordinary income.
Keep in mind

The ordinary income tax rate is higher than the tax rates for capital gains. For specific questions about how dividends are taxed and how to report them on your taxes, consult with a tax professional.

Are my stocks guaranteed to be loaned out?

No, having eligible stocks doesn’t guarantee they’ll be loaned out. Stocks with low market availability and high demand are more likely to be borrowed.

How is loaned stock protected?

The investments and cash you hold in your Robinhood brokerage account are typically covered by SIPC insurance. In the unlikely event that Robinhood files for bankruptcy, SIPC would recover up to $500,000 of the investments and cash in your brokerage account (up to $250,000 for cash only).

However, loaned stocks aren’t covered by SIPC insurance, so we use cash collateral to protect your loaned stocks instead. This means that we hold cash equal to the value of your loaned stocks at a third-party bank. This bank would pay you the value of your loaned securities in cash if Robinhood filed for bankruptcy and couldn’t return your stocks to you.

Disclosures

Stock Lending isn’t appropriate for all customers. Stock Lending is offered through Robinhood Financial LLC. Securities are lent to Robinhood Securities, LLC. There is a risk that Robinhood Securities could default on its obligations to you under the Stock Lending program and fail to return the securities it has borrowed. If Robinhood Securities defaults and is unable to return loaned securities, you won’t be able to trade such securities as usual.

Provisions of the Securities Investor Protection Act may not protect you with respect to loaned securities. However, Robinhood Securities provides cash collateral for such securities loans, and that collateral may constitute the only source of satisfaction of Robinhood Securities’ obligations in the event that it fails to return the loaned securities. In some circumstances, the collateral held on your behalf may not equal or exceed the value of loaned securities.

Review the Robinhood Stock Lending Agreement to learn more about Stock Lending and its risks.

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Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Credit card products are offered by Robinhood Credit, Inc. (“RCT“) (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Securities products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. Cryptocurrencies held in RHC accounts are not covered by FDIC or SIPC protections and are not regulated by FINRA. RHY products are not subject to SIPC coverage but funds held in the Robinhood Money spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

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All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Credit card products are offered by Robinhood Credit, Inc. (“RCT“) (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Securities products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. Cryptocurrencies held in RHC accounts are not covered by FDIC or SIPC protections and are not regulated by FINRA. RHY products are not subject to SIPC coverage but funds held in the Robinhood Money spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

© 2024 Robinhood. All rights reserved.