What is the Fully Paid Securities Lending program?

Through the Bitso app, you can enroll in Alpaca's Fully Paid Securities Lending (FPSL) program, a way to earn additional income from the stocks you already own. Once enrolled, Alpaca may lend your eligible shares to borrowers on your behalf, and you'll receive monthly payments when your securities are borrowed.

How does it work?

When you enroll via Bitso, Alpaca facilitates the lending of your eligible fully paid shares to borrowers, typically institutions that need them for short selling or trade settlements. Borrowers pay an interest rate based on market conditions, and you receive a monthly payment calculated based on the value of the shares on loan.

What are the benefits?

• Earn passive income from stocks you're already holding.
• Reinvestment potential: use the monthly income to grow your portfolio.
• Support market liquidity by enabling short sellers and more efficient price discovery.
• Retain ownership: you keep economic exposure to your shares, including potential price appreciation, even while they're on loan.

What are the risks?

• No guarantee of lending: there's no assurance your securities will be lent or that a market for them exists.
• Market price risk: when securities are lent for short selling, there's a possibility their price may decline.
• Loss of voting rights: temporarily transferred to the borrower while shares are on loan. Unenroll at any time to restore them.
• Tax implications: income from lending may have tax consequences. 
• Not covered by SIPC: loaned shares are not SIPC-protected. See SIPC section below.

Am I eligible?

You must meet at least one of the following:

What account types and securities are eligible?

All account types holding US equities that have been fully paid for (or that exceed any margin debit) are eligible. This includes stocks, ADRs, and ETFs. You cannot choose specific securities to lend; by enrolling, all eligible holdings in your account will be considered.

Will all my eligible shares always be lent?

Not necessarily. Lending depends on market demand: if there isn't a favorable rate for a given security, it may not be lent.

How are lending rates determined?

Rates are set by market forces, specifically the supply and demand for each individual security at any given time.

When do I get paid?

Monthly interest is posted to your cash balance on the last settlement date of the following month.

How much can I earn?

Interest accrues daily and is credited monthly. Your earnings depend on how in-demand your lent shares are. Here's an illustrative example:

Accrual uses a 360-day year (standard practice). Actual earnings vary.

Can I sell a stock while it's on loan?

Yes, at any time. Once the loan closes, which may happen concurrently with the sale,  loan interest stops for that position.

How are dividends handled?

You receive a payment-in-lieu, a cash equivalent of the dividend, adjusted for your applicable tax rate.

What happens to my SIPC coverage?

Loaned shares are not covered by SIPC. Instead, Alpaca holds cash collateral equal to at least 100% of your loaned shares' value at a third-party bank. If Alpaca couldn't return your shares, that bank would compensate you in cash (also FDIC-insured up to $250,000).

What happens to my voting rights?

Voting rights transfer to the borrower while shares are on loan. Unenroll at any time to restore them.

Is Pattern Day Trading (PDT) still available?

Yes, Pattern Day Trading is supported while enrolled in FPSL.

Important disclosures

Please read Alpaca's Important Risk Disclosures for FPSL before enrolling. All investments involve risk. Past performance does not guarantee future results.