When your securities are lent through the Fully Paid Securities Lending (FPSL) program, you earn monthly income based on how in-demand your lent shares are.
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:
| Item | Value |
|---|---|
| Shares on loan | 2,000 USD |
| Market price per share | 20 USD |
| Total market value | 40,000 USD |
| Annualized lending rate | 9.00% |
| Daily accrual (40,000 USD × 9% ÷ 360) | 10 USD |
| Hypothetical monthly income (× 30 days) | 300 USD |
Accrual uses a 360-day year, which is standard practice. Actual earnings vary.
How are dividends handled?
You receive a payment-in-lieu, a cash equivalent of the dividend, adjusted for your applicable tax rate.