In order to identify borrowers and facilitate the stock lending process, eToro will partner with BNY, which will act as the custodian, and stock lending platform EquiLend. This stock lending launch showcases how eToro is currently leveraging BNY’s global clearing platform, offering integrated solutions across US and international clearing, custody, settlement, execution, and financing.
EToro’s new stock lending programme will allow users in the UK and Europe to earn passive income by lending out their stocks. Whole unit ‘real’ stock positions will be made eligible for lending, CFDs and fractional shares excluded, and eligible shares rounded down to the nearest whole share.
Further, eToro’s view is that stocks with low market liquidity, high volatility and high demand are more likely to be borrowed and generate higher earnings, with loaned-out stocks backed by collateral. With this partnership, eToro, BNY and EquiLend have established a scalable global operating model allowing the existing client base to access over 19 exchanges around the world.
How the programme works is eToro users who choose to lend their stock temporarily hand over ownership of the stocks to the borrower and lose voting rights while the stock is on loan. However, they can still receive dividends, sell the stocks or opt out of the programme at any time at no cost.
This feature will first be made available to members of the eToro Club, which was “created as a way to show appreciation to our valued clients.” The Club’s membership is split into five categories and the stock lending programme will be rolled out to Platinum users first, and then gradually to all other tiers over time.
Those eligible will be provided with the option to opt in and if they accept, their entire portfolio of stock positions will be considered for lending. After this point, monthly statements will be sent if their stock is successfully lent, enabling the user to keep track of the income earned.
Dan Dougherty, managing director, global head of sales and account management, EquiLend, highlights that the collaboration with eToro enables the enhancement of its services “with a fully paid lending program that benefits from cutting-edge technology. This move not only demonstrates EquiLend Spire's commitment to innovation but also eToro's dedication to providing efficient and modern financial solutions to its users.”
Victor O’Laughlen, head of global clearing, BNY, adds that this relationship supports “a holistic solution set across clearing, settlement, custody, foreign exchange, cash management. This development represents the very best of eToro, Equilend and the heritage and innovation of BNY’s world-class platform, as investors look to access a cutting edge feature in their investing journey.”
Yossi Brandes, VP execution services, eToro, concludes by saying: “Stock lending has traditionally been the preserve of large financial institutions and it’s been much harder for retail investors to earn passive income in this way. Yet it is an important practice that helps to support liquidity in financial markets. Leveraging BNY’s Global Clearing services, we want to level the playing field by enabling millions of eToro users across the UK and Europe to engage with stock lending in an easy and transparent way.”