Is it legal for IBKR to loan out a much bigger amount of shares from the client small margin loan
- Thread starter Fxmove88
- Start date
The screen shots don't show this.
It is normal practice at IBKR that, when a position is held with borrowed money, you don't receive "cash dividend" but "payment in lieu of dividend".
Payment in lieu of dividends came from GBP55.37/GBP0.041045 = 1,349. shares.
As of Friday at GBP3.3375 per BP.L share, those shares being loaned out worth approximately GBP4,502.
The loan was GBP87.25
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I just discovered to my dismay that IBKR has loaned out (doing rehypothecation) for GBP4,600 of my BP shares for borrowing a small amount of margin loan of GBP87.
Is this legal for IBKR to lend out a much bigger amount of shares for something that seemingly a small margin loan.
You can check lending/borrowing activity in the activity statement further down.
There you see how many are lent out and the collateral and interest.
Ibkr keeps half of interest paid (borrow fee) by others for your shares.
I do not sign up for stock yield enhancement program as I dont like to loan out my shares
Ah, i see.
I like the extra yield, although it's pretty low on most stocks.
I dont know how far short availability and borrow fees have an effect on stock prices. On nano cap and micro cap i feel like it does but on the big names i doubt it.
It shouldn't be possible except under unusual circumstances if that's your only use of margin.
Your screenshots aren't conclusive though as they could be loaning your shares out against non-GBP margin balances and I think possibly if you're using then as collateral for short options positions.
There are also ex date and settlement timing issues.
Fwiw, I've had payment-in-lieu change to dividend a few days after the fact so you might give it a week and see if the classification changes.
Your screenshots aren't conclusive though as they could be loaning your shares out against non-GBP margin balances and I think possibly if you're using then as collateral for short options positions.
There are also ex date and settlement timing issues.
Fwiw, I've had payment-in-lieu change to dividend a few days after the fact so you might give it a week and see if the classification changes.
I just discovered to my dismay that IBKR has loaned out (doing rehypothecation) for GBP4,600 of my BP shares for borrowing a small amount of margin loan of GBP87.
Is this legal for IBKR to lend out a much bigger amount of shares for something that seemingly a small margin loan.
yup. A margin account means your shares are held in IBKR’s name, not yours.
Any stock/bond buying through a broker is always on street name. One is segregated (ie when no margin loan ) and the other is rehypothated in the market (when there is margin loan) ie IBKR does not use its own money to fund the margin loan.