What is the benefit of lending out my stock shares at Fidelity or Schwab??

[Fain]

I don’t counterparty risk is an issue but divs on lent shares are treated differently than divs on owned shares

You can also get some negative tax treatment if you get a PIL payment instead of an actual dividend payment.

Edit... Oops someone beat me to the punch

Only if your American. Most of the world treats it the same for taxation

 

[ajacobson]

Read your margin agreement. If it has a re-hypothecation clause you've given them the right. Most clauses say little or nothing about compensation, but not all.

 

[Cabin111]

It seems like this is used mostly with the wealthy...People with millions of dollars, pension funds, mutual funds, hedge funds, wealth management services. I know brokers lend stock, but I don't know to what extent they lend to other brokers.

Do I have the general concept correct?

 

[ajacobson]

No - read your agreement.

 

[Cabin111]

No - read your agreement.

So who are most likely to lend out their shares? Could it be as easy/common for a Robinhood client, who buys 100 shares of GameStop or AMC and then makes the loan??

That small of a client??

 

[ajacobson]

Has nothing to do with the client - has to do with the aggregate and if there is a custody/clearing firm involved or they run their own box. Read your agreement and you discover virtually any fully paid securities can be lent. Most size institutions use a custody agent. Even OCC has a stock loan business.

 

[ajacobson]

An OCC Loan filing