We're updating our terms - Securities Lending

Everyone will have to give their individual consent to their shares being lent. You donā€™t have to sign up.

I think itā€™s an industry norm because most people donā€™t know itā€™s happening. The point here is really simple, why would anyone agree to anything that COULD be used against their investment objectives?

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True!

But itā€™s been mooted that you might need to leave the platform.

Yes. My understanding was that there isnā€™t any option to opt out.

You could sell all your positions in your GIA and rebuy them back in your ISA. I have maxed out my ISA allowance so this is not viable for me.

You canā€™t opt out of share lending for the SIPP either. So in my case I either consent or transfer to another broker.

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Not all stocks are ISA eligible

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This blog post is not meant to outline how we might productise sec lending in the future. It is meant to give lengthy advance warning of changes to T&Cs.

We receive and hold client cash in bank accounts, which we earn some interest on. Thatā€™s revenue for us to support the low-cost service we provide customers. We pay interest on uninvested cash for Plus members.

Weā€™re taking a similar approach to sec lending, where weā€™ll earn some interest on client securities we have under custody, which is revenue for us to support building Freetrade. The banks that will be borrowing securities and posting collateral are in the same tier as where we hold client cash, eg JP Morgan.

On opting out, initially that would mean keeping all your assets in an ISA, or moving your account elsewhere. As I said in the AMA, weā€™d like to productise sec lending for our more advanced users, along with things like the ability to short stocks.

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Wow! I didnā€™t expect to see this. While Iā€™m not a big short stock guy me and @CashCow would be laughing if weā€™d been able to short Virgin Galactic!

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TBH Iā€™m slightly confuse - Basically Iā€™m I right we not getting extra charges or anything?

No extra charges

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Thumbs up from me, love seeing the Freetrade business model growing and new revenues streams adding strength to the company financials, makes me less twitchy as an investor and confident in the future of the company.

As a client it also makes me confident that Freetrade prices will continue to be cheap for me and that the company will continue to be a place I can build my wealth.

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Freetrade have to make themselves profitable if their going to last in whatā€™s becoming a very competitive market. They canā€™t simply continue to rely on crowdfunding forever.

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The shorting argument doesnā€™t bother me, when I buy a stock Iā€™m betting itā€™ll go up - if some chump things otherwise let them put their money where they mouth is. We get cheap / free trading and Freetrade get to build a sustainable business model.

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I personally think Freetrade have been shorting all my recent stock picks :sweat_smile:

Do what you want with my shares ā€¦ Just give them back when they hit green :sweat_smile:

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So just bit curious what the main issue in regards to this Security Lending

For those who donā€™t want to accept these terms, can you in specie transfer out of FT?

I know thereā€™s talk of GIA-GIA in specie transfers

If there is no opt out then I will be moving brokers

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Bye :blush:

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I donā€™t have a problem with this, despite the adage from Hamlet which means that I gift rather than lend to friends in need:

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

However @Viktor I wonder if this policy may change things for Muslim investors who consider benefiting from interest being haram. This may be a small customer sector for FT so possibly inconsequential.

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The amount of strong opinions on this is really interesting. Iā€™m not a freetrade investor so I donā€™t see it as ā€œwoo more revenueā€ but I also donā€™t see it as a particularly bad thing. ETFā€™s that I own already do this. The indirect benefit to me is that it keeps the managment fees lower. Thatā€™s basically the same with FT. The question to ask is ā€œam I happy with the service I get and the price I pay for it?ā€ For me personally the answer is yes and this doesnā€™t change that, so I donā€™t care either way. The thing that would make me leave is if FT got uncompetitively expensive, which this should help prevent IMO.

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To everyone who said theyā€™re leaving Iā€™d like to know wether you are happy to move to a broker subsidise their operations selling complex financial instruments that they know the major of their customers loose money on? IG/T212

Or

Who removes the ability for wealth building for you he and new investors with high and complex fees. Gate keeping the next generation from taking control of their futures.

They majority of stock lending is to make sure YOUR trades are executed efficiently and at prices YOUā€™RE happy with. Non FT Crowdfunding investors want FT to be a reliable safe place for your money, a sustainable business is the only one you can trust with your investments.

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