With the Fully Paid Lending Income Program, you can lend your securities to TD Ameritrade each month to potentially earn additional income. There is no added cost to participate and risk is mitigated because the loan is backed by 102% cash collateral.
Potential benefits of the program
- Additional monthly income potential
- No action required after successful enrollment*
- No additional cost to participate
- Maintain ownership of your shares
- Opt out of the program at any time
- Loans are back backed by 102% of cash collateral held at a 3rd party bank, aimed at reducing risk
- Easily keep tabs on earnings in your account with statements
It’s important to note that there are risks of Fully Paid Lending Income
- Typical Investment Risk: All inherent investment risks apply and share performance is subject to market fluctuation.
- SIPC: The SIPC doesn’t cover shares on loans, which are secured by 102% collateral provided by TD Ameritrade and held at a third party bank. You can withdraw on this collateral in the unlikely event of a default in which TD Ameritrade does not return borrowed securities.
- Tax Implications: After you lend out a dividend-paying security, you’ll receive cash-in-lieu of your regular dividend payment. It’s important to remember that dividend income is taxed at a different rate.
- Waived Voting Rights: Your shares will be lent out and you will temporarily forfeit your voting rights to the borrower. However, if you’d like to reclaim them before the record date, it’s easy to regain your voting privileges.
- Market Dictates Demand: Whether or not your securities are borrowed depends on their volume and lending market demand. Interest rates and demand will vary by security over time
How Fully Paid Lending Income works
When you successfully enroll* in the program, we’ll manage the lending process automatically and you’ll receive interest based on the demand for your securities in the lending market —with large positions in unique equities often in highest demand. Plus, you'll retain full ownership of your investments, which means your earnings will continue to perform based on market conditions.
Here’s an example of how the interest adds up
Shares on loan
Annualized lending interest rate**
$100,000 x 8.50% / 360 days
$23.61 x 30 days / month
For illustrative purposes only. Past performance is not a guarantee of future results.
Frequently Asked Questions
Get answers to commonly asked questions about the Fully Paid Lending Income Program.