Swissquote, a leader in online banking, is opening doors for its clients to explore a new avenue for additional income through securities lending. This innovative offering allows clients to lend their investment assets to reputable financial institutions, earning a monthly income while retaining the rights to receive dividends and sell their securities anytime.
Let’s see what securities lending is and how it works.
Securities lending temporarily transfers securities, such as stocks, bonds, or other financial instruments, from one party (the lender) to another (the borrower). When someone borrows money from a lender, they often provide some form of security or collateral to the lender. In return, the lender charges a fee or interest for the loan.
The borrower benefits by obtaining the securities they need to fulfill their trading or investment needs, and the lender benefits by earning income from the loan. Securities lending is a common practice among financial institutions and can be an additional source of income for investors.
Securities lending involves temporarily lending individual stocks and ETFs to financial institutions. Swissquote is making this option available for all its private clients directly from their bank accounts and apps, requiring no minimum deposit for qualification. Initially, the lending option applies to shares and specific ETFs, with plans to expand to more asset categories.
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Let’s see how it will help traders lend their securities to others.
Clients participating in securities lending stand to benefit from attractive returns, with a yearly net client return rate of up to 1%. Monthly payout allure adds a consistent income stream to their portfolios. Notably, the return can exceed an impressive 5% for certain securities, making it a compelling avenue for additional earnings.
The process begins with explicit registration and agreement acceptance, offering clients a seamless onboarding experience. Swissquote lets clients activate the ‘Securities Lending’ option for their entire portfolio online. Moreover, clients can exercise control by excluding specific securities from the lending program via customer service, ensuring a tailored and strategic approach to portfolio management.
Clients benefit from any asset value increase while securities are on loan. They also receive dividends during the loan period, providing a dynamic investment strategy.
Clients lose voting rights during the loan period but may receive cash payments instead of regular dividends. Borrowers pay lending income, providing a consistent revenue stream.
Swissquote, a Swiss leader in online banking, ensures that clients can lend their securities confidently. Securities are exclusively lent to reputable, top-tier banks and financial institutions. Swissquote acts as the primary interaction counterpart for clients throughout the lending process.
Swissquote has partnered with securities lending specialist Sharegain to offer securities lending services. The service is driven by demand and provides clients access to borrowing institutions and years of experience in the field. The collaboration is a testament to Swissquote’s commitment to providing innovative financial solutions for its clients. Sharegain is based in London and New York City.
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