IB Stock Yield Enhancement Program

http://institutions.interactivebrok...ockYieldEnhancementProgram.php?ib_entity=inst

"You can earn extra income on the fully-paid shares of stock held in your account by joining IB's Stock Yield Enhancement Program. This plan allows IB to borrow shares from you in exchange for cash collateral, and then lend the shares to traders who want to sell them short and are willing to pay a fee to borrow them. Each day that your stock is on loan, you will be paid a loan fee based on market rates. You share a percentage of this with IB (currently 50%) as a fee for managing the program.

"This program is available to eligible IB customers1 who have been approved for a margin account, or who have a cash account with equity greater than 50,000 USD. "

PDF file with detail about securities lending disclosures:
https://www.interactivebrokers.com/...pleView?file=SecuritiesLendingDisclosure.html

 

I like the idea, but 50% fee?

 

m22au, thanks for posting this. However, the Web page states, "To sign up for IB's Stock Yield Enhancement Program, log into Account Management and check Stock Yield Enhancement Program from the Trading Configuration page in the Trading Access section." But there's no such selection available. IB support said it might be available sometime next week.

 

It is not clear to me what "fully-paid shares of stock" are.

Say you have a margin account with a deposit of $100.000, and you buy 100 different stocks for a total of $100.001.

Is any of these 100 stocks fully paid? Or none? Or 99?

 

“Excess-margin securities” are securities that have not been completely paid for, but whose market value exceeds 140% of the
customer's margin debit balance. In this disclosure and in the relevant agreements, we collectively refer to fully-paid and excess margin securities as “Fully-Paid Securities” or “Fully-Paid Shares”.


This probably answers it. So if you have an 100k account with 200k stocks than all shares are Fully-Paid Securities as 200k > 100k x 1.4

 

Another problem with this program is there's no guarantee that they will return your shares prior to an ex-dividend date (although IB indicates they will attempt to do so). But if unsuccessful, any gains from loaning out shares will be completely wiped away by higher taxes from earning dividends in kind versus earning qualified dividends.

 

How do you prevent IB from loaning your shares out? I have a bunch of payments in lieu of dividends from IB loaning my shares out.

 

Good question. You have to sign up for this program so they can load out your fully paid shares. But perhaps other shares are in street name and they can loan them out without your OK. Anyone know? It must be in the fine print of your brokerage agreement.

 

Still not available as of today.

 

Yes now it is.

It is part of the Trading Permission matrix. (search in the Trading Permission matrix on 'Yield', and click the box)