Securities Lending Program FAQ

• Overview of the Securities Lending Program
• Eligibility
• How does Questrade determine whose shares get loaned out?
• Payout and earnings
• Statement changes and navigation
• Benefits of Fully Paid Lending
• Tradeoffs of Fully Paid Lending
• Start participation
• Stop participation
• Managing my securities

The Securities Lending Program, also known as Fully Paid Securities Lending, allows you to lend your securities (stocks and ETFs) to other investors and earn passive income. When you lend your securities, you will retain complete ownership of your assets throughout the lending period allowing you to sell or adjust your strategies at any time. In exchange for borrowing your securities to facilitate their trading activities, the investors will pay you a fee.

What accounts are eligible?

As of today, only securities held in TFSAs, margin and cash accounts are available to be lent out. We are working quickly to bring more accounts into the program.

What securities are eligible?

Currently only fully paid U.S. stocks and ETFs are eligible. This means stocks and ETFs that are bought on margin are not eligible. We are also working to add Canadian securities into the program.

The securities must be listed on one of the major exchanges and have at least one the following:

• 6-month average volume weighted average price of $2.00 or more
• 6 month average daily trading volume of 100,000 shares or more
• 6-month average free float market capitalization of $200 million or more

Securities that do not qualify can be held in the account, but only qualifying securities will be lent out.

Payouts will come from a pooled revenue share which means your compensation will depend on how many shares you have and contribute to the ones being lent out.

For instance: let’s say someone is interested in borrowing 200 shares of stock XYZ, and Questrade has 1000 shares to lend, Questrade will lend 20% (200 required shares / 1000 available shares) of the shares you have made available to borrow.

In this case, if you have 50 shares of XYZ available to be lent out, Questrade will lend 10 shares (20% of your available shares) at the going rate.

How do I get paid? And how often?

You will get paid once a month in a lump sum of all the income received from securities lent out—it will be automatically deposited into your account.

What will I be paid?

The lending rates can vary day-to-day, and depend on factors such as lending supply, borrowing demand, and overall market conditions. Stocks with lots of interest for short-sellers and hedgers will tend to have higher lending rates.

Where can I see how much I will earn?

A lending confirmation will appear in your account on the next business day after the loan has started. This confirmation will show you the securities lending rate and the amount of shares being borrowed. When the loan ends (or if the terms of the loan change), you will receive a lending confirmation displaying that the loan has ended.

The dollar amount that you are paid from all your loaned shares will appear on your account activity page the day it's paid and also on your monthly account statement.

What is the split between what Questrade makes and what I make?

What you are paid depends on the type of loan that is initiated. There are two types of loans in the Securities Lending Program: High demand and low demand.

For stocks with high demand loans - Questrade will split the securities lending fee 50/50 with the combined pool of customers who have contributed shares.

For stocks with low demand loans - 10% of net revenue earned will be provided to the combined pool of customers who have contributed shares.

Monthly account statement

All shares loaned out will be captured in your monthly account statement. This will be broken down into three different areas:

• Payout area - This shows you how many shares were loaned out, and how much you were paid for each security
• Lending confirmations - This shows when your loan was started and finished, and if there were any changes to your loan
• Cash collateral - This gives you a summary of the cash collateral that Questrade is currently holding for the securities you have loaned out
  

There are many benefits to the Securities Lending Program:

• You passively earn income on investments that you’re already holding in your account.
• Your investments are fully protected. We keep 100% of the market value of the shares in collateral to ensure no risk to you when loaning your shares. 
• Every self-directed customer is eligible and there is no minimum dollar value. 
• You retain full control of your shares, you can still buy and sell whenever you want.

Please note that at launch only securities held in TFSA, Cash, and Margin accounts are eligible to participate - other registered accounts coming soon!

It's important to consider some potential trade-offs of Stock Lending before deciding to participate:

• You will not be able to vote with shares that are actively loaned out. However, if you want to temporarily regain voting rights you can always opt-out before a vote and then opt back in once your votes are cast.
• Your shares will temporarily lose CIPF coverage. However, to make sure your investments are still protected, we always keep 100% of the market value of the shares as cash collateral so that you can be compensated in the unlikely scenario that the shares are not returned.

For a full list of trade offs, please refer to the Securities Lending Program risk disclosure.

All Questrade customers with eligible accounts (TFSA, margin and cash) can be enrolled in the Securities Lending Program. Questrade will facilitate this process and there is nothing that you need to do to participate.

You can easily opt out by logging in to Questrade on a web browser and navigate to Management from your trading screen and go to Securities Lending Program.

You can also exclude specific securities from the program on the same page. You can opt out of any specific security at any time, which will be processed on the next business day. You are also able to select a specific risk level that aligns with your preferences.

Where can I see the shares that are lent out?

You can see the shares that are being lent out by logging in to Questrade on a web browser and going to Reports > Lending Confirmations. They will also appear on your monthly account statements.

If I want to sell my shares, does this have any impact?

There are no restrictions - you can sell your shares instantly. Lending them out has no impact on your ability to trade. As soon as you sell your shares, we will recall your shares from the pool. There is nothing you need to do!

Will I be notified if any of my positions have been loaned out?

As loans can be issued or recalled throughout the day, you will not be notified when your positions are loaned out. However, you can easily see when your shares are loaned by logging into Questrade on a web browser and going to Reports>Lending confirmations.

The Lending confirmation will be available the next business day after the loan has begun, has ended or if the terms of the loan (payout, amount of shares, etc.) has changed.

Note: The information in this blog is for educational purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied, is made by Questrade, Inc., its affiliates or any other person to its accuracy.