Start here by checking your eligibility Log In Required . Your enrollment package will be emailed to you in 1-2 days, if eligible.
Once enrolled, there are no extra steps. All eligible securities in your account, now or in the future, will be considered for borrowing based on demand in the lending market.
How am I paid?
Each month you will be paid lending income that is automatically credited to your Fidelity account. Lending interest rates are variable and may change at any time based on ple of how interest is calculated, using an annualized lending rate of 8.50%.
† The lending interest rate is based on the relative value of the loaned security, which is determined by several factors including borrowing demand and short selling, and general market conditions.
When deciding whether to participate in Fidelity’s Fully Paid Lending Program it is important that you are aware of these considerations.
Once enrolled, if Fidelity borrows a security, the length of the loan and your ability to earn income will vary depending on short selling demand and available lending supply.
Shares on loan are not covered under Securities Investor Protection Corporation (SIPC). However, Fidelity provides collateral at a minimum of 100% of the loan value. In any securities lending transaction, counterparty default is a risk.
Cash distributions paid on securities borrowed over the dividend record date are credited as a “cash-in-lieu” payment, which may have a different tax treatment than the actual dividend from the issuer.
When you loan your shares, you relinquish voting rights. However, if you want to vote your shares, you can recall your loan in advance of the record date.
Please refer to our Fully Paid Lending Program fact sheet for more details.
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Frequently asked questions
- Have at least $250,000 in your Fidelity brokerage account(s)
- Answer 4 quick suitability questions Log In Required
- Receive confirmation of your enrollment
It’s easy! Securely move money to your Fidelity brokerage account with an electronic funds transfer. And, use our transfer tracker to monitor your transfer of assets request every step of the way. Start here Log In Required
No, Fidelity is not obligated to borrow securities. By enrolling, you are giving Fidelity permission to borrow from your current and/or future eligible securities, as needed.
When enrolling, you will complete the Master Securities Lending Agreement (MSLA), which is a separate agreement from any previously executed margin agreement(s).
Under the securities lending agreement you maintain full economic ownership of the securities on loan and may sell or recall loans at any time. 3 However, you do relinquish your ability to exercise voting rights if shares are on loan over a proxy record date.
Dividends paid on securities borrowed by Fidelity pursuant to the Fully Paid Lending Program will be credited to your Fidelity Account in the form of a “cash-in-lieu” payment if shares are borrowed over a dividend record date. Receipt of cash-in-lieu payments may have different taxable consequences than receipt of the actual dividends from the issuer.
In order to mitigate the impact of cash-in-lieu payments to taxable accounts, Fidelity may return shares prior to a dividend record date. To help offset the potential tax burden associated with the receipt of cash-in-lieu payments in place of qualified dividends (as defined in the Jobs and Growth Tax Relief Reconciliation Act of 2003), Fidelity will credit participating taxable accounts with an additional credit adjustment equal to % of the qualified portion of the distribution. This adjustment will occur annually after all reclassification information is made available. 4
You can view your securities on loan and real-time lending rates on the Loaned Securities page, which can be accessed from your Positions page. You also will receive a detailed monthly statement, which is available on the Statements page under Account Records.
The lending rate for each security is based on several factors including borrowing demand, the overall lendable supply of the security, short selling and hedging interest, and general market conditions.
Changing market conditions may necessitate a change in the lending rate. If a rate changes, you will receive a detailed trade confirmation. You can also view the rates in real-time on the Loaned Securities page. As always, you maintain the right to “recall” or request to have shares returned at any time. Please refer to the Master Securities Lending Agreement (MSLA) for more details on how the lending rate is determined.
Fidelity receives compensation in connection with the use of your loaned securities when lending to other parties or facilitating the settlement of short sales.
Shares on loan are not covered under SIPC. However, Fidelity provides collateral at a minimum of 100% of the loan value. In any securities lending transaction, counterparty default is a risk.
Fidelity is your counterparty on all fully paid loans. If Fidelity were to default on its obligations as defined in the MSLA, you would have the right to withdraw the collateral from the custodian bank.
In addition, voting rights are relinquished, and dividends are paid as cash-in-lieu payments which may have different tax consequences than actual dividends. And, short selling activity may impact the price of your security.
Fidelity will provide you with collateral that is held at a third-party custodial bank. The bank will serve as your collateral agent payday loans Coshocton OH and hold your collateral in cash or cash-equivalent form. The collateral will be equal to at least 100% of the value of the shares on loan.
Either you or Fidelity can terminate the loan at any time by selling the shares on loan (which is a termination or “recall” notice) or recalling the shares by contacting Fidelity to request that a loan be returned. Fidelity can terminate a loan at any time by returning the shares on loan.