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What is security lending?

Lend shares and collect cash

Trive allows retail investors to use a strategy traditionally used by institutional investors such as funds: They lend their shares for a short time and receive a fee in return.

Investors who have high-dividend stocks in their custody accounts can enjoy the income they receive from the dividend payouts of the companies. Investors do not have to do anything other than hold the securities. Another way to generate income with shares is to lend them out: securities lending. Here, the owner lends shares or other securities for a short time and receives cash and a fee as collateral. Typically, institutional investors such as mutual funds or index funds (ETFs) lend securities to generate additional income.

Why investors borrow shares

In most cases, financial professionals such as hedge funds or other large investors borrow stocks to make short sales. That is, they borrow stocks in order to sell them. They do this in the hope that the stock's price will fall so they can buy it back later at a lower price. Afterwards, the investment professionals return the borrowed shares. This type of investment is called short selling, which refers to speculating on falling prices. Securities lending is a strictly regulated financial instrument. Thus, the lender must deposit a high security to lend a share, which is worth more than the lent share. Securities lending is an attractive source of income for funds and ETFs.

Investors can earn additional income by lending shares

Through Trive, it is now also possible for private investors to generate income through short selling by lending their shares - all at the touch of a button. For each day that Trive customers lend their shares, they receive interest on the cash collateral deposited in their securities account for the loan. At the same time, Trive customers can continue to trade their lent shares without restriction. Participation is voluntary, which customers can activate and deactivate at any time. If securities lending is activated, the lending takes place automatically. If the investors' shares are in stock lending demand, they are lent. A security deposit is made on the investors' account in return. Investors can see via Trive's platform the interest rate they are paid on the cash collateral and the fee the broker charges for stock lending. Investors using this broker's offering can sell their lent shares and terminate their participation at any time. Participants can continue to make profits and suffer losses on their loaned shares through price movements.

Trade short sales easily through Trive

  • Owners lend their shares and receive a fee in return.
  • For institutional investors, securities lending offers lucrative income opportunities.
  • Customers can activate and deactivate stock lending at the touch of a button.