IB Stock Yield Enhancement Program

Discussion in 'Interactive Brokers' started by m22au, Jun 30, 2011.

  1. Gustaf

    Gustaf

    So anyone tried this yet?
     
    #11     Jul 21, 2011
  2. traders

    traders

    Yes I did sign up early july, and there is security lending activity starting last friday.

    Currently 5 XLU shares are lent out against $175 collateral for a net fee rate of 0.06% (wow that will be a shocking amount :) ).

    All this info appears in new Activity Statement sections which you get once shares are lent out.

    BTW: I have much more in position than 5 shares, so not all shares are lent out.
     
    #12     Jul 24, 2011
  3. Traders,

    Did you run IB's estimate of what you might earn before signing up? I'm wondering if what they're borrowing from you is in line with their estimate. If I've done the math correctly, you'll see a penny a month.
     
    #13     Jul 24, 2011
  4. gkishot

    gkishot

    Unclear then who is going to collect stock dividends? Definitely not short sellers because they pay dividends. It should still be people who hold the stocks long.
     
    #14     Jul 24, 2011
  5. sprstpd

    sprstpd

    I think you still get the dividend, it is just whether it is classified as a normal dividend or a substitute payment. On the day of the dividend, if your stock is lent away, you get less favorable tax treatment as compared to a normal dividend.
     
    #15     Jul 24, 2011
  6. Correct. If you receive a dividend on stock that has been lent out then you will pay tax effectively as if it is ordinary income (i.e. at a 28, 31 or 35% rate) versus reporting it as a qualified dividend (taxed at a 15% rate).
     
    #16     Jul 24, 2011