Questions tagged [security-lending]

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What are the tax consequences of loaning securities to one's broker aside from the dividends being paid as payment-in-lieu taxed as income?

I'm trying to understand the tax consequences of loaning securities to one's broker in the United States: The dividends of the loaned security are being paid as payment-in-lieu, which is taxed as ...
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1 vote
1 answer
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What are the pros and cons of participating in a "Fully Paid Lending Income" program in IRA?

I am interested in lending my passive holdings for generating more income. Hopefully the risk is minimal. I see, for instance, two brokerages offering it. I am not asking any recommendation on ...
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How are SBLOCs typically paid back?

I've read several articles about Securities-Backed Lines of Credit, and none of them talk about typical loan terms other than the low interest rate. Apparently it's common to repay the interest ...
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1 vote
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What are the tax consequences of the borrower defaulting in securities lending?

I recently agreed to lend out some of my shares to my brokerage. They deposit collateral in a bank account, and the balance is adjusted daily based on the changing value of the shares borrowed. My ...
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Enrolling in securities lending program vs. converting position to a synthetic long stock

Some stock brokerages provide opportunities for their clients to earn some money by allowing the brokerage to lend out the client's shares to short sellers. Common names for these programs are: "...
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How much risk is there in securities lending? [duplicate]

I worked for a startup for many years and as a result I have a lot of shares in a company that went public via a SPAC deal. I know it's risky but I'm choosing to sell them over a period of a few years ...
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What happens to the dividends when you enter into a securities-based line of credit or "portfolio loan"?

For this example let's say you have a stock portfolio that is paying you dividends and you take out a securities-based line of credit against the portfolio from your local bank. What happens to the ...
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1 vote
1 answer
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If I loan securities to my broker, can this turn long-term capital gains/losses into short-term capital gains/losses?

E.g., if I purchase stock A on 2020-10-30, loan it to my broker from 2021-02-01 to 2021-11-20 and sold it on 2021-12-01 making a capital gain of X USD, will that count as long-term or short-term ...
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12 votes
3 answers
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How can I use my stock portfolio in order to get a lower interest rate mortgage?

Background I have a decent amount of money saved up, most of it invested in the stock market. Right now I'm thinking about getting a condo / house. I have more than enough in my stock portfolio to ...
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3 votes
2 answers
2k views

What are the risks of allowing my stock broker to lend out my shares to short sellers?

Some types of brokerage accounts allow the stock broker to lend my shares to short sellers (probably without needing to notify me). Do I incur any risks when I sign up for such accounts? Is there any ...
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Securities lending program vs a Margin Account

Suppose I have a brokerage account and I am long on a stocks very heavily and there are short sellers who need this stocks from my broker. There are two ways a stock broker can lend securities held ...
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How securities lending works

After doing some research, literature suggests that "most" securities lending happens over the counter as opposed to securities trading which is mostly done through a centralized electronic exchange. ...
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Does "cash in lieu of dividend" incur any tax consequences in an IRA?

My broker has a program that I can participate in which can lend out my fully-paid stocks for others to borrow (typically for shorting.) In exchange for my borrowed stock, they provide cash ...
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6 votes
7 answers
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When an investor makes money on a short, who loses the money?

Is it the securities lender? If so, do they discriminate on the stocks they are willing to lend, or will they lend any stock? It seems like the business of lending securities would be extremely risky....
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