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.
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.
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.
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.
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).