Lending shares to Trading 212.

[OIC]

Anyone done it?

Is it worth the hassle?

Love the blurb warning about your lent shares possibly being used by traders to short your stock.

Still, if you're not looking to sell anytime soon could be a useful way to get paid for hodling.

[bitchstewie]

I see things like that and sit back and feel quite content that I use solidly boring platforms that don't do any of that st.

Why would anyone do that

[Simbu]

Freetrade offer this. It only works on stocks held outside of ISAs, and directly instead of in things like ETFs. Then, the returns are so small for giving someone leverage to devalue your interest, it hardly seems worthwhile!

[EastStand]

bhstewie said:

I see things like that and sit back and feel quite content that I use solidly boring platforms that don't do any of that st.

Why would anyone do that

They do give you a choice……..

[thr32]

bhstewie said:

I see things like that and sit back and feel quite content that I use solidly boring platforms that don't do any of that st.

Why would anyone do that

To earn an incremental return for no downside.

TH

[btsidi]

thr32 said:

To earn an incremental return for no downside.
TH

Unless you want to sell the stock.
Will the recall work, be on time etc?

[greengreenwood7]

aren't those that are 'borrowing' the stock short sellers who are trying to cover their positions? If so, kind of flies in the face of wanting own stock to increase in price.

[thr32]

btsidi said:

Unless you want to sell the stock.
Will the recall work, be on time etc?

Does Trading 212 not offer contractual settlement? Does it block trading on lent positions? I'd be very surprised if it did.

greengreenwood7 said:

aren't those that are 'borrowing' the stock short sellers who are trying to cover their positions? If so, kind of flies in the face of wanting own stock to increase in price.

They are. But let's take a mid-FTSE 250 stock at random (MONY if you're interested). Vanguard owns £79.2m of this stock. Withholding the loan even on an oh-so-PH punt worth hundreds of thousands would have no effect whatsoever if Vanguard lent their holding out.

Finally, I suspect the OP chose Trading212 because of being sensitive on price. The margin the broker makes on the lending drives price competition in the market, which customers benefit from.

TH

Edited by thr32 on Tuesday 10th December 14:03

[DonkeyApple]

bhstewie said:

I see things like that and sit back and feel quite content that I use solidly boring platforms that don't do any of that st.

Why would anyone do that

Your platform will be doing that, they just don't have any financial upside in cutting you in.

If you're 212 then most of what your clients hold is crap that has a huge borrowing cost an also just costs the physically hedge the risk of the OTC exposure to clients they'll be running on their book.

The solution to supplying low cost lending to short OTC traders and not having to hedge them with physical from the market is to get your non leveraged traders to sign over their stock for peanuts. Offer them a few percent and save market lending fees of sometimes >10% plus, as you then don't need to hedge the short position off your book you save the market spread for yourself.

It's good business really like getting clients to move free cash into MMFs that are just like JP Morgan MMFs but possibly not at all like JPM MMFs.

[DonkeyApple]

greengreenwood7 said:

aren't those that are 'borrowing' the stock short sellers who are trying to cover their positions? If so, kind of flies in the face of wanting own stock to increase in price.

Yes. It's 100% a non issue when lending blue chip stocks out but for the punter's guff that 212 clients gamble on then that is exactly what you're ultimately doing.

When Musk put stock in TSLA up as collateral for those enormous bank loans those banks were lending out Musk's stock as per his agreement when he negotiated the cheapest terms possible. So back then when he took to social media to blame short selling for his stock losing value he was the main facilitator and came over as a bit of a to those who understood how these collateralised loans worked. . He was precipitously close to a margin call death spiral over that period.

[bitchstewie]

DonkeyApple said:

Your platform will be doing that, they just don't have any financial upside in cutting you in.

I use IWeb - they're about as boring and 1990's looking as I think it gets so whilst I guess anything is possible I'd be surprised.

Put it this way I'd feel a lot more comfortable with some solid boring funds held on IWeb than I would with stocks held on Trading 212 and loaned out even if it's with my express agreement for them to do so.

How badly do people really need that little bit extra return for the increased risk

[Simpo Two]

DonkeyApple said:

Your platform will be doing that, they just don't have any financial upside in cutting you in.

Are you saying that all platforms 'lend' your investments to others to play with?

[NowWatchThisDrive]

bhstewie said:

DonkeyApple said:

Your platform will be doing that, they just don't have any financial upside in cutting you in.

I use IWeb - they're about as boring and 1990's looking as I think it gets so whilst I guess anything is possible I'd be surprised.

Put it this way I'd feel a lot more comfortable with some solid boring funds held on IWeb than I would with stocks held on Trading 212 and loaned out even if it's with my express agreement for them to do so.

How badly do people really need that little bit extra return for the increased risk

Regardless of what your platform does, the index trackers that you own through that platform will almost certainly be doing it with the shares they hold. It's a ubiquitous and totally unremarkable practice among asset managers.

As far as individual stock holdings on retail platforms are concerned, it's only really the janky fintech-type places that do it, as it helps them keep costs and end customer fees down as suggested earlier. The traditional brokers like Hargreaves Lansdown, AJ Bell, Interactive Investor et al don't do it. And no one does it with ISA holdings at any rate, because it's explicitly against the rules.

[DonkeyApple]

bhstewie said:

DonkeyApple said:

Your platform will be doing that, they just don't have any financial upside in cutting you in.

I use IWeb - they're about as boring and 1990's looking as I think it gets so whilst I guess anything is possible I'd be surprised.

Put it this way I'd feel a lot more comfortable with some solid boring funds held on IWeb than I would with stocks held on Trading 212 and loaned out even if it's with my express agreement for them to do so.

How badly do people really need that little bit extra return for the increased risk

Yup. What you'll generally notice within the Ts&Cs is a clause re nominees and how they hold your stock in compliance etc and within there will be a statement that they have the right to lend stock if they wish. That's 100% normal and 100% irrelevant as the broad spectrum of clients will be holding blue chips and completely normal stuff.

Gaming sites, sorry neo brokers, will be mainly holding punting stocks where there is a very high cost lend if any lending at all so getting access to client punts to facilitate other punts can be quite rewarding. For the broker.

[DonkeyApple]

Simpo Two said:

DonkeyApple said:

Your platform will be doing that, they just don't have any financial upside in cutting you in.

Are you saying that all platforms 'lend' your investments to others to play with?

It's generally a normal practice, especially historically, but will be in the ts and cs.

[ferret50]

I have lending enabled on my T212 account. Earns me a few pence per day, every day, including weekends......and I have bought/sold stuff that has been leant out and the lent value has sometimes exceeded the equity value!

[clubsport]

ferret50 said:

I have lending enabled on my T212 account. Earns me a few pence per day, every day, including weekends......and I have bought/sold stuff that has been leant out and the lent value has sometimes exceeded the equity value!

With recent stock market highs, the cost of borrowing stock has increased notably over the last few months.

Where there is a weekend or long weekend with bank holiday, repo/stock lending traders often squeeze costs up to those needing to borrow, so there is a good chance your 3 or 4 day term makes more of an effective return per day than the usual overnight lending.
Good luck!

[OoopsVoss]

DonkeyApple said:

Simpo Two said:

DonkeyApple said:

Your platform will be doing that, they just don't have any financial upside in cutting you in.

Are you saying that all platforms 'lend' your investments to others to play with?

It's generally a normal practice, especially historically, but will be in the ts and cs.

Errr shocked people, do you have a pension? This is really important you connect dots.

They (Pension funds and asset managers) are the largest lenders of stock, globally.

If somehow this missed Finance 101, the long holders of stock (pension funds, asset managers etc) are only to happy to lend stock for a fee. The more in demand the better. Where do you think all the low dividend supply comes from when you engage in tax arbitrage? The asset and fund managers, they just don't have to cut you in. They claim it's to offset holding costs, but it's mega business. Thanks to all you investors with funds, pension etc etc.

The existence of massive borrow supply (so asset managers making stocks available to borrow) fuels short selling. Without it, you can't sell a stock without very high levels of buy in risk.

Now, it's very debatable whether this is value add or destruction (lenders claim the former that helps determine a stocks true worth - of course), but you can't short without it. Or no directional betting, CFDs, futures etc.

Read this and be amazed about the $27trillion market you missed.

https://www.islaemea.org/sl-hub/#:~:text=Securitie...

Edited by OoopsVoss on Wednesday 11th December 20:19

[Simpo Two]

OoopsVoss said:

Errr shocked people, do you have a pension? This is really important you connect dots.

They (Pension funds and asset managers) are the largest lenders of stock, globally.

What about non-pension investments?

[DonkeyApple]

Simpo Two said:

OoopsVoss said:

Errr shocked people, do you have a pension? This is really important you connect dots.

They (Pension funds and asset managers) are the largest lenders of stock, globally.

What about non-pension investments?

Check the nominee terms. There's usually a clause where you are assigning the rights for the broker to put your stock out to lend.

The key here is that there is a marked difference between Mrs Miggins' holding of Glaxo held in nominee at a large firm being available to lend to the market versus Punter Pete's speculative bet on an illiquid stock destined to make him £millions being lent to his neighbour, Gambling Gary who is going to make his £millions shorting the stock to zero. In those conditions you're just the bookie creaming off the top from two slappers in a mud pit, not caring which slapper wins and safe in the knowledge that whichever one does win that round they'll lose the next one.