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.

Am I eligible?

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 while the flag is in place. For details, check out Pattern day trading.

What types of investments are eligible?

Whole shares of fully paid securities, such as stocks, ETFs, and ADRs, are eligible to be loaned out through Stock Lending. Securities purchased on margin and fractional shares are ineligible. For example, if you have 1.5 fully paid shares of MEOW, we can only loan out 1 share as part of Stock Lending.

How to enable or disable it

  1. Go to Account → in the app, select Menu or on the web, skip to the next step
  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

Who is borrowing and why?

Your stocks are borrowed by Robinhood Securities, LLC for a variety of purposes, including to facilitate trade settlements, for onward lending, or to use as collateral for other loans. Financial institutions and other market participants to whom Robinhood may lend your stocks may in turn use those stocks for a variety of purposes and it’s likely that such securities will be used to facilitate one or more short sales or satisfy delivery requirements resulting from short sales.

Since you are holding the shares long term in your account, there is a risk that the activity of short sellers could potentially affect the value of your holdings as they typically expect to profit from a price drop. If you disable Stock Lending, Robinhood will terminate any then outstanding loans and disable Stock Lending for your account to prevent security borrowing. If you don’t want your securities used to facilitate short sales, you should not participate in our Stock Lending product and services.

Stocks with low market availability and high demand are more likely to be loaned out.

How do I get paid through Stock Lending?

You’ll get up to 15% of the gross revenue generated by Robinhood when it lends out securities to the market. We determine what you’re paid each month for lending shares of a particular stock, as follows:

  1. For each day of the month that you lend shares of a stock to us, you’ll get a daily rebate of (a) up to 15% of the weighted average rebate rate ($/share) that Robinhood earned by lending the stock on that day multiplied by (b) the number of your shares that we borrowed that day.
  2. We round each daily rebate to the nearest cent.
  3. At the end of the month, if the sum of that month's daily rebates equals at least $0.01, we’ll pay you that amount. If it’s less than $0.01, we’ll pay you $0.01.
Example

If the daily rebate for the shares of a loaned stock is less than $.005 on each day of the month, you’ll get a $0.01 payment for the stock that month.

To check how much money you’ve made through Stock Lending, check your investing 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, all of your stocks, ADRs and ETFs 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 may be paid out and taxed differently.

If your stocks are on loan over the dividend record date, you’ll still receive cash equal to any dividends earned—it may just be passed to you from the borrower through Robinhood, not from 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 investing account statements as Manufactured Div. instead of Cash Div. To mitigate the impact of cash-in-lieu payments, in most cases, Robinhood will attempt to return your shares prior to any dividend record date.

  • Qualified dividends qualify for the lower 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 long-term 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 do shareholder voting rights work for loaned stock?

Typically, shareholders of companies are able to exercise some amount of voting power when new policies are proposed, such as a board of directors appointment or corporate action. However, you won’t have shareholder voting rights when your shares of stock in that company are on loan.

Keep in mind

This is just a condition of your stocks being on loan. If you disable Stock Lending or your stocks are returned to you, you’ll regain shareholder voting rights.

How is loaned stock protected?

While the investments and cash you hold in your Robinhood investing account are typically covered by SIPC insurance, loaned stocks aren’t covered by SIPC insurance. Instead, we use cash collateral to protect your loaned stocks. This means that we aim to hold cash equal to a minimum of 100% of 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). Review a list of RHC licenses for more information.The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Review a list of our licenses for more information. 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.

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RHF, RHY, RHC, RCT, and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC, RCT, and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC isn’t a member of FINRA and accounts are not FDIC insured or protected by SIPC.

RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood 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). Review a list of RHC licenses for more information.The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Review a list of our licenses for more information. 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. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated.

RHF, RHY, RHC, RCT, and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC, RCT, and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC isn’t a member of FINRA and accounts are not FDIC insured or protected by SIPC.

RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood 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.

Robinhood, 85 Willow Road, Menlo Park, CA 94025.© 2024 Robinhood. All rights reserved.