Lend your stocks, earn passive income*
Activate Stock Lending in the app and we’ll lend out your stocks and ETFs when there is demand for them.
Passive income
When your stocks and ETFs are lent out, you’ll get paid while still holding onto your investment.
Loans are safeguarded
We only work with highly reputable financial institutions. To protect loaned out stocks and ETFs, borrowers are required to provide collateral. Measures are in place to make sure your stocks are returned to you. You can find more info on risk mitigation at the bottom of the page.
Stay in control
You’re always in charge. Stock Lending happens in the background, and you can start or stop it anytime in the app. Even while your stocks and ETFs are on loan, you can still track them, trade them, and receive dividends just like usual.
How does it work?
Stock Lending is an opportunity to put your investments to work. Stock Lending is a process in which stocks, ETFs and ETCs are temporarily lent by the owner (you) through an intermediary agent lender to a borrower (bank or broker-dealer), in exchange for income and collateral. It’s similar to renting out your valuable items—you earn income, and your possessions are safeguarded until returned.
To keep your stocks safe and sound, borrowers provide extra collateral that’s worth more than the loan. If anything goes wrong, this collateral steps in to buy back your shares.
Every month, we publish a report stating exactly which stocks and ETFs have been borrowed. We will send this to you by email. If we do not share a report it means none of your assets have been borrowed.
This entire process happens in the background, so you won’t even notice it’s happening.
How much can you earn?
How much you earn depends on the demand for your assets, the size of your holdings and current lending rates. The higher the gross lending rates and the portion of loaned out assets, the more you can potentially earn. However, if no one “borrows” your stocks, you won’t receive any income.
We deduct operational costs and 3rd party lending agent fees from the gross return paid by borrowers. This net annualised return is then shared 50-50 with you. As of 6 January, this implies that clients receive 22,5% of the gross rate paid by borrowers. Please note that these aggregated costs will fluctuate based on actual operational costs incurred by BUX and arrangements with lending agents.
What are the risks?
- Borrower Default Risk: When you lend your assets, ownership is temporarily transferred to the borrower. If the borrower fails to return your assets, collateral provided by them will be used to repay you. However, if the collateral isn’t enough, there’s a chance you might not recover your full investment.
Mitigation: BUX works exclusively with highly reputable borrowers. If a borrower is unable to return your stocks, the collateral will be liquidated and the stocks be repurchased on the market. If there is no availability the collateral will be used to repay you. All loans are over-collateralised to 105% - Repurchase Risk: If the borrower can’t return your loaned assets, we’ll use the collateral to buy them back for you. But if that collateral isn’t worth enough—for instance during a market increase—it might not be sufficient to repurchase some of your investment.
Mitigation: Collateral is marked to market daily. - Selling and Timing Risk: Normally, lending out your financial instruments doesn’t stop you from selling them when you want. But if a lot of BUX clients decide to sell at the same time, or if BUX needs to use collateral to return your loans, you could face delays in selling your asset.
Like all investment activities, Stock Lending can involve risk. Below is a summary of risks specific to Stock Lending.
If you want to read more about the risks please check the Risk Disclosure.
* By signing the agreement, your stocks will be eligible for loans from 6 January 2025 onward.
If you want to read about additional risks, please check Page 5 of the Stock Lending handbook.
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. Even if you give consent, it is not sure your stocks will be lent out.
Will investors receive dividends on loaned out stocks?
Yes, you will still receive dividends as usual.
Do investors need to approve Stock Lending?
BUX doesn’t lend out stocks and ETFs by default. You can easily activate the ‘Stock Lending’ service whenever you want in the app-settings.
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.
What is collateral?
For any stocks on loan, BUX receives assets from the borrower that are worth 105% of the loan. We do this so that if the borrower does not return your stocks, we can sell this collateral and use the proceeds to repurchase the stocks for you.
BUX only accepts government bonds as collateral. This is because they are low risk assets and are easy to sell quickly so that we can buy replacement stocks as quickly as possible.
If there are other aspects you’d like information about, please take a look at the Stock Lending Handbook – or reach out to our friendly Customer Support team.