Introducing share lending at Freetrade

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Important information: Participating in share lending carries risks. Share lending returns vary depending on borrower demand. Read more about the risks. The illustration assumes a portfolio with ÂŁ1,000 in shares on loan and a monthly yield of 0.02%.

We’re launching our share lending programme in the coming weeks. We’ve just sent out emails this morning and you’ll see the key information if you go to your app.

Let’s dive into the key details :point_down:

If you decide to opt in, you may earn additional income from the shares that you own in your GIA and SIPP (shares in an ISA can’t be loaned).

We’ll share 50% of all fees earned when your shares are on loan. The other 50% will be retained by Freetrade and our partners who help us operate the share lending programme.

You’ll still be able to sell your shares as normal, but you should be aware that there are some risks.

Importantly, a borrower may fail to return your shares. If this happens Freetrade will cover any shortfall.

You should also consider the following:


You will not be able to vote shares on loan You may receive a manufactured dividend Shares on loan may be used for short selling
You can contact customer service if you want to vote your lent shares. We'll mark manufactured dividends in your account statement to help when preparing your tax return. Short selling can put downward pressure on the share price.


Please make sure you have the most up-to-date version of the app to be able to view the terms.


What else should I know?


Opt-in and opt-out We’ll only loan your shares out if you opt in to our share lending programme. If you opt in and decide it’s not for you, you can opt out at any time through the profile screen in your app.
High quality collateral and borrowers We hold government bonds worth more than the value of your shares and only loan your shares to high quality borrowers. We hold the collateral in accordance with the FCA’s client asset rules so that it will belong to you even if we were to go insolvent.
Freetrade will make you whole if a loan fails In the event that a borrower did not return your shares, we would sell the collateral that we hold for you and repurchase your shares. In the unlikely event that the collateral was insufficient to repurchase your shares, we would make up the difference ourselves so that you don't lose out.

Freetrade is covered by the FSCS, which may compensate eligible customer claims of up to ÂŁ85,000 in the event of our insolvency.

Learn more

You can learn more on the Freetrade website, where we’ve prepared a short overview and a more detailed look at share lending.

You can ask any questions here too!

Important information

When you invest, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you invest.

Freetrade does not give investment advice and you are responsible for making your own investment decisions. If you are unsure about what is right for you, you should seek independent advice.

ISA and SIPP eligibility rules apply. Tax treatment depends on personal circumstances and current rules may change. US dividends received into your SIPP may be subject to US withholding tax.

A SIPP is a pension designed for you to save until your retirement and is for people who want to make their own investment decisions. You can normally only draw your pension from age 55 (57 from 2028), except in special circumstances.

At present, Freetrade only supports Uncrystallised Fund Pension Lump Sums (UFPLS) for customers who wish to withdraw funds from their SIPP after their 55th birthday. We strongly encourage you to seek financial advice before making any withdrawals from your SIPP.

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Seen this in the app.
Two questions:

  1. can I opt-in for GIA and opt-out for SIPP?
  2. are all shares available for lending out or can we pick and choose?
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Hey @Hitesh, good questions!

  1. Opt-in is only available for both the GIA and SIPP together, they cannot be separated for this purpose.
  2. You can read the FAQs at the bottom of our share lending page (“What shares are lent”?) to find out more about what instruments are eligible to be lent. Right now, you won’t be able to pick and choose which shares are available for lending if you choose to opt in.
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There is no opt out option only remind me later?

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If you click “remind me later” you are not opting in so your shares won’t be loaned. This will dismiss the terms for you.

You need to opt in to participate in the programme. Until you opt in there’s nothing to opt out of. The share lending terms only apply to those who accept them and opt into the programme.

If you later change your mind and want to opt in, the terms are available on your portfolio screen to review.

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well done!

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10p for every ÂŁ1000 of shares lent per month.

Forgive me if I don’t get excited.

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Yes but will we be reminded every week like the annoying Treasury Bills reminders that we cant opt out of?

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Nope definitely not :slight_smile:

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Yes, in this situation my gut feeling is that the risk outweighs the reward. I do not fully understand share lending, seems a bit strange to be able to even do that.

For that reason, risk seems too high for the percentage gain and for that reason i am not opting in.

Hope it’s a good source of revenue for Freetrade though, its good to see diversification of streams

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The current BoE base rate is 5% and the US Fed rate is 5.25%, I think you can see a higher rate of return than in the example.

On the t212 share lending site, and there’s a real range of interest rates for their most borrowed stocks, from practically nothing to 4.17%.

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Hi @Han the example is intended to show the breakdown of income from share lending, rather than to show what potential rates may be.

There is a table of historic rates in one of the FAQs on our main product page that gives a sense of how rates are distributed. It’s right at the bottom. This is a histogram that shows how the annual yields for each share, every year between 2018 and 2023 are distributed.

If you participate, you’ll see in your monthly statement the income earned by your shares that were loaned (not all of your shares will necessarily be on loan all the time if you’re part of the programme) alongside the rates borrowers were paying.

Of course please remember that past performance is not predictive of future results. Lending rates change daily and are influenced by the demand for specific shares and the supply in the market.

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Wasnt this feature already launched I heard talk about it but it’s been so long I cant remember

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Nice, glad profits will be shared.

Will the option to opt in or out always be available in the future?

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Yes always. You can opt in and then opt out whenever you want.

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Nothing like “loaning” your shares out for peanuts so some fund can then short your holdings into oblivion.

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" The illustration assumes a portfolio with ÂŁ1,000 in shares on loan and a monthly yield of 0.02%."

@acamp - I noticed from the email that your copywriters missed the boat on comms here. I think many customers will read this and think that their total yield may be 0.02% with this feature, and not that this is incremental yield on top of any growth or dividends they may received. It’s also a fee they may receive regardless of positive or negative share price movements, so effectively (tiny) risk mitigation.

I get the sense that your lawyers and compliance team were so worried about protecting themselves that you forgot to also consider marketing, and how to sell the positive aspects of this feature.

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Carnt see any benifit to this tbh

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Good thing its an optional feature people can choose to use or not

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Will the returns be as a lump sum or would individual shares be listed with the return ?