Robinhood Offers Its Users New Stock Lending Feature

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by Tyler Durden
Thursday, May 05, 2022 - 06:20 PM

Just in time for the market to bottom, Robinhood has launched a new stock lending feature, which allows users to lend out their shares and receive proceeds for doing so. 

The company calls it an "opportunity to earn extra income on the stocks you already own" and the company's "democratized approach to fully paid securities lending". 

Steve Quirk, Chief Brokerage Officer, said in a new Robinhood blog post: “Our version of Stock Lending empowers customers to put their investments to work while keeping it simple. Robinhood does the work of finding borrowers and managing transactions while customers can add a potential source of passive recurring income to their portfolio.”

“We’re excited to break down yet another barrier and democratize a product that has been historically preserved for the wealthy with high barriers to entry,” he continued.

Robinhood is different from traditional brokerages because they don't require customers to have large balances to qualify to receive payments from stock lending. "We’re making fully paid securities lending, and the opportunity for passive recurring income that comes with it, available to customers who traditionally have not had access to it," the company wrote. 

Customers must have an account valued at $5,000 or more, $25,000 in income and some trading experience to qualify for the program, the Wall Street Journal wrote. They also noted that the global securities lending market had $828 million in revenue last month and that this figure was up 20% from April 2021. 

Robinhood says users will be able to buy and sell stocks lent out like normal and that "participating stocks are backed by cash collateral at a third party bank for added protection". 

Well, in that case, color us content.