Securities Lending
What is securities lending?
Securities lending is an established technique brokers use to generate more revenue. It means lending the stocks and ETFs to trustworthy third parties. At BUX we use this revenue source to keep our fees as low as possible.
On the last day of every quarter, we publish a report stating exactly which stocks and ETFs have been borrowed.
Why are we lending securities?
Our model is different to most brokers. We use additional revenue streams like securities lending to improve the service we provide and keep our fees and commissions as low as possible.
This means you have the ability to minimize the amount of fees you pay, helping you to build a portfolio over time.
It also means we can keep providing features like real-time quotes, free deposits and withdrawals, no custody fees, as well as access to an ever-growing list of assets and markets around the world.
How we work
In order to work with securities lending, we are creating infrastructure to ensure we’re protecting your best interests.
Collateral
Collateral consists only out of government bonds with a strong credit rating and is adjusted on a daily basis to match at minimum 105% of the loan value
Trustworthy counter-parties
BUX only works with professional parties (Tier 1) with vast experience in lending Financial Instruments.
Risks
It is important to take into account the borrower’s default risk. That happens when a company we have loaned stocks or ETFs to is unable to return them. This could happen for a number of different reasons, and that’s why we insist on sufficient collateral.
If you want to read about additional risks, please check Page 5 of the Securities Lending handbook.
For the general Risk Disclosure, please refer to this document.
FAQ
Which stocks and ETFs will be lent?
We do not know in advance which stocks and ETFs will be lent or when; sometimes just a part of the portfolio is lent and sometimes none of it. The market dictates the demand for the stocks and ETFs.
Do investors need to approve securities lending?
By becoming a client of BUX, you agree that the stocks and ETFs in Your account may be lent. You don’t need to sign any additional agreement. If you wish to check the most recent client agreement, please click here.
Can you sell the stocks and ETFs that have been loaned to another party?
Yes, you can sell the stocks and ETFs that have been loaned as you normally would. You will also receive any dividends that are paid out to the stocks and ETFs you own.
If there are other aspects you’d like information about, please take a look at the Securities Lending handbook – or reach out to our friendly Customer Support team.