What is stock lending?

Wealthsimple's stock lending feature allows clients to participate in something commonly known as Fully Paid Lending (FPL). Stock Lending allows you to earn passive income on stocks you already own by lending your shares to other investors for a fee. These investors borrow your shares for various trading activities and pay you a fee in return.

Wealthsimple does the work to find borrowers for your stocks, and you get paid if there's a match through a revenue-sharing model called Pooled Profit Sharing. This means that you'll start earning income through stock lending as soon as an investor borrows your eligible stocks.

Key features and considerations

• Passive income opportunity: Earn extra income from your existing investments.
• Effortless process: Wealthsimple handles borrow matching administration.
• Tax considerations: Income is taxed as interest income in non-registered accounts. You're taxed at your marginal tax rate.

Payout schedule

You're paid for your stock lending earnings on, or shortly after the first 10 business days of the new month for the previous month's lending activity. You can expect your earnings by the end of that day.

Benefits of stock lending

There are many benefits to participating in stock lending. These include:

• Earning passive income: Earn income by lending out stocks that you already own.

  Note: Stock Lending can help you earn more from your portfolio, but participating doesn't guarantee your shares will be loaned.
• Keeping ownership of your stocks: You maintain full ownership of your stocks. You can still sell them at any time and realize gains or losses as normal.
• Keeping your assets protected with Wealthsimple: When you participate in stock lending, Wealthsimple secures your investment with cash collateral equal to 100% of the market value of your loaned stocks or ETFs, plus any additional cash collateral received from the borrower.
• Everyone is eligible with Wealthsimple: There's no minimum portfolio balance required. The only requirement is that you must have an open self-directed account with us.

Risks of stock lending

It's important to understand the risks of stock lending before you agree to participate. These can include, but are not limited to:

• Giving up your voting rights: If you lend out your shares, you temporarily give up your voting rights until the shares are returned.
• Losing Canadian Investor Protection Fund (CIPF) coverage: The CIPF doesn't provide coverage for stocks that are lent through stock lending programs. With that being said, Wealthsimple provides collateral to protect clients if the shares aren't returned.

Please see our Risk Disclosure Document for a more detailed description of the risks related to stock lending.

Eligibility criteria for securities

We can lend out securities listed on an exchange. For Canadian-listed stocks, they must also meet one of these conditions:

• Securities that have a 6-month average volume weighted average price (VWAP) greater than or equal to $2.00.
• Securities that have a 6-month average daily trading volume greater than or equal to 100,000 shares.
• Securities that have a 6-month average free-float market capitalization greater than or equal to $200 million.

Ineligible securities

Currently, we don't loan out:

• Securities that don't have sufficient demand to lend (this is an ever-changing dynamic that is market-driven)
• Any fractional shares
• Securities that aren't generating income

Learn more about stock lending on Wealthsimple

• Participate in stock lending
• Earning income with stock lending