Participate in Stock Lending

We are slowly adding clients to gain access to our stock lending program. If you wish to gain access as soon as possible, please submit your details through this form and we will grant you access within a couple of weeks. After filling out this form, you will receive an email once you have been added.

Please note that signing up for Stock Lending is only available through the Wealthsimple mobile app.

Wealthsimple’s Stock Lending feature will allow 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 will use your shares to facilitate several trading activities such as covering their own failed trades, short selling, hedging or arbitrage.

Once Stock Lending becomes available, Wealthsimple will do the work to find borrowers for your stocks and you get paid if there is a match through a revenue-sharing model called Pooled Profit Sharing. This means that you will start earning income through Stock Lending as soon as there is an investor that borrows your eligible stocks.

Note: Eligible accounts include trading TFSAs and Personal (non-registered) accounts.

Keep reading this article to learn about the following:

Benefits of Stock Lending
Tradeoffs of Stock Lending
Revenue sharing and allocation
Fees
Eligible securities
How to participate in Stock Lending
How to stop participating in Stock Lending
How to view your loan confirmations and details
Receiving dividends while participating in Stock Lending

Benefits of Stock Lending

There are many benefits to participating in Stock Lending. These can include:

Earning passive income
With Stock Lending, you can earn a form of income by lending out stocks that you already own.
Note: Stock Lending can help you earn more from your portfolio, but participating does not guarantee your shares will be loaned.
Keeping ownership of your stocks
With Stock Lending, you do not lose economic ownership of your stocks. This means you will still be able to sell them at any time and realize gains or losses as normal.
Keeping your assets protected with Wealthsimple
Wealthsimple protects your assets when you participate in Stock Lending. In return for lending your stocks, Wealthsimple allocates cash collateral to the trustee account to secure the amount of the loan. We will allocate cash collateral to a Trust account equal to 100% of the market value of your loaned stocks or ETFs plus any additional cash collateral that we receive from the borrower.

Everyone is eligible with Wealthsimple
There is no minimum amount you need to hold in your portfolio to be eligible to participate in Stock Lending. As long as you have funds in a DIY trading TFSA or Personal (non-registered) account with Wealthsimple, you will be able to participate in loaning your stocks.

Tradeoffs of Stock Lending

It is also important to understand the tradeoffs of Stock Lending before you agree to participate. These can include:

Giving up your voting rights
If you successfully lend out your shares through Stock Lending, you will temporarily be giving up your voting rights. These voting rights are given up until your shares are returned.
Losing CIPF coverage
The Canadian Investor Protection Fund (CIPF) does not provide coverage for stocks that are lent through Stock Lending programs. With that being said, Wealthsimple provides collateral to protect clients in the event that the shares are not returned.

Please see our Risk Disclosure Document for a more detailed description of the tradeoffs associated with Stock Lending.

Revenue sharing and allocation

Wealthsimple will use Pooled Profit Sharing for revenue sharing and allocation. This means that every time we initiate a trade to lend out one of our clients shares, all of our clients who have agreed to participate in Stock Lending and who own shares of that security will have their prorated portion of total inventory lent out. They will then receive the same prorated portion of revenue.

Example
Let’s say that Wealthsimple initiated a trade to lend out 300 shares of stock ABC. Below, you can see how Pooled Profit Sharing would impact different clients based on the number of shares that they owned:

Client	Shares of ABC owned	Shares lent out	Revenue share (of the 50%)
Client 1	100	50	17% (50/300)
Client 2	200	100	33% (100/300)
Client 3	300	150	50% (150/300)
Total Inventory Pool	600	300	100%

More details:

The portion of total inventory is calculated and reallocated on a daily basis
Revenue is calculated on a daily basis and distributed on a monthly basis
Wealthsimple will post daily loan confirmations to advise you of your loaned positions
Clients will receive 50% of the revenue (see more on this below).

Fees

There are no fees to participate in Stock Lending with Wealthsimple. Instead, you will earn 50% of the income that your loaned stocks generate.

Example
Let’s say you have a $12,000 portfolio with Wealthsimple, and you agree to participate in Stock Lending. If you were to loan all your shares at a lending rate of 8%, you could expect the following:

The total amount of earnings that your stocks will generate in one month will be $80.00
The amount of revenue allocated to Wealthsimple would be $40.00
The amount of revenue that you would earn that month would be $40.00

Note: The example above is for informational purposes only. The lending rate can vary depending on the market situation during the loan. When looking at the earnings breakdown in the Wealthsimple app, you will only see what you would earn from lending out your shares. The portion of revenue collected by Wealthsimple is already deducted from the total potential earnings you see.

Eligible securities

Eligible securities: include securities that are listed on an exchange. Specifically for Canadian listed equity securities, eligible shares are any that also meet at least one of the following criteria:

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

Ineligible securities: We might not loan all the securities in your account but this may change as our stock lending program evolves. Currently, we do not loan out:

Securities that do not have sufficient demand to lend (this is an ever-changing dynamic that is market-driven)
Any fractional shares
Any U.S. dividend-paying securities
Securities that are not earnings accretive

To agree to participate, follow the steps below. Stock Lending is only available through the Wealthsimple mobile app.

Log in to your Wealthsimple mobile app
Tap the Home tab at the bottom of your screen
Choose a trading account you wish to loan stocks from
Scroll down to Introducing Stock Lending and tap the arrow icon
Read through the information provided then tap Continue to agreements
You will see a new set of account agreements with Stock Lending included
Review the new agreements, check the box that you agree to the Stock Lending agreement and tap Confirm to participate

Participating in Stock Lending will make all of your eligible accounts participate in Stock Lending. If you wish to exclude one of your accounts, you can exclude that account on an individual basis.

Stop participating in Stock Lending

If you previously agreed to participate in Stock Lending and no longer wish to, follow these steps:

Log in to your Wealthsimple mobile app
Tap the Home tab at the bottom of your screen
Choose the account that your stocks are loaned in
Under Stock Lending, tap Manage
Scroll down to the bottom of your screen and tap Manage Settings

Note: It can take up to five business days to terminate a loan after opting-out.

To exclude specific securities from Stock Lending, or to recall your shares in order to participate in voting, please contact our support team. Our team will be able to help you exclude securities on an individual basis.

Similarly, you can set a percentage of shares that you do not want to lend out by contacting our support team.

View your loan confirmations and details

Wealthsimple provides loan confirmations for each of your eligible shares that have been loaned through Stock Lending. To view your loan confirmations, follow these steps:

Log in to your Wealthsimple mobile app
Tap the Home tab at the bottom of your screen
Choose the account that your stocks are loaned in
Under Stock Lending, tap Manage
Select View all lending activities

Tip: You can also see your loan activity in your monthly statements. To view your monthly statements, follow the steps in this article.

Why you may see 0% rebates on some loans
Some stock loans involve the lender paying (and the borrower receiving) a fee. A lender would be interested in these types of loans when interest rates are higher and the interest earned on the cash collateral exceeds the cost of the fee paid to the borrower. Wealthsimple will lend your shares in this way when there are no loans available where the borrower will pay us a fee, and the interest earned on the cash collateral exceeds the cost paid to borrowers to lend your shares. When this happens, your shares are loaned out and you receive a portion of the interest income. You are not charged for any fee paid to the borrower. These loans are reflected on your stock loan confirmations with a loan rate of 0%.

Receiving dividends while participating in Stock Lending

If you own shares of a CAD dividend-paying stock that are on loan before or on the dividend’s record date, you will receive a manufactured payment that mirrors all dividends and distributions on securities and will have the same tax implications as any other CAD dividend payments. Wealthsimple will issue the manufactured payments on the dividend payment date.

Non-cash dividends will be added to your account, but may not be loaned back out immediately.