We're updating our terms - Securities Lending

[GoFundYourself]

That’s an interesting point. Not too sure how ot works to be fair. Better to wait for them to respond why the risk is put on us.

[Engelbert1969 (Steve H)]

Of course there flipping are! Fine for us to take those on tho, or ignore them and spin the roulette wheel.

[TInvest]

Couple of points to pick up on this (and it’s worth noting I’m fairly neutral on the topic);

1. Pedantic maybe but these two bullets are contractictory. It’s not the case that collatoral MUST ALWAYS exceed the value of securities, the next point highlights that intra-day there could and inevitably will be discrepancies.

• Collateral must always exceed the value of securities on loan. This is held as client assets and are subject to the same controls under which all client money is held.
• Collateral is valued daily and any discrepancy in value to the shares on loan are rectified.

2. ‘Your investments are protected up to £85k’, what is the definition of ‘your investments’? Is that the collateral or the stocks? Presumably the collateral?

[Engelbert1969 (Steve H)]

Again, if the risk is so small, let Freetrade take it

[TInvest]

Ultimately it is a ‘cost’ to us for using the platform. Either we accept it and take the risk, or we don’t and pay a more explicit fee elsewhere at a broker who doesn’t lend shares.

As I say, I’m fairly non-plussed. But I only use FT for a subset of my portfolio, as others have aluded to, the risk is higher if your pension is sitting here.

[GoFundYourself]

I used it as my main broker till today

Now im looking for a new broker, keeping my isa here till i find were to transfer

[Engelbert1969 (Steve H)]

Why would anyone let 6 figure pension money sit with Freetrade open to this risk? Pay a tiny % extra with another broker and the risk is gone.

[Engelbert1969 (Steve H)]

I still hope Freetrade don’t go ahead with it. There’s time to row back. I think this seriously damages the brand.

[GoFundYourself]

For sure. I think they will do it anyway as they need to be profitable and that’s one of the ways to achieve it.

But even if they backtrack now it’s a bit too late as trust is broken

[Engelbert1969 (Steve H)]

@acamp this point has remained unanswered throughout this topic. Really appreciate a transparent response in line with the Freetrade ethos.

[jimmy_long_bombs (James)]

This is the biggest issue here which has been totally ignored by those in favour.

Forget morality of shorting etc, what risk does this move place on user’s securities? What does “reasonable measures” to return funds constitute in reality?

I don’t want to find out the hard way so will be moving to AJ Bell and HL unless there is a U turn.

Crazy most of the people on this thread are glossing over the fact they could lose all their money through no fault of their own, and have no recourse to get it back.

Tail risk as Taleb would say. Unlikely, but if it does happen it will wipe you out.

[AdamL (Adam)]

We're updating our terms - Securities Lending

Hey, JB. I appreciate where you are coming from. That’s why we posted about these changes in our community way, way ahead of the rollout: to educate. It’s also why we are doing an exceptionally long, 90-day grace period. Over the years, we have also spoken frequently about our intentions to introduce this revenue stream as we grew as a company. When it comes to securities lending itself, you’re right that this feature of the markets has been thrust into the spotlight in the last year. But i…

[jimmy_long_bombs (James)]

Somewhat solves it, unless Freetrade goes under too. In which case we would be a long way down a list of creditors.

[RumNCoke (Samantha Eaton)]

There’s another way to achieve profitability.

Not everyone will like it though.

That is to slow down growth. It gives FT a chance to use more of its funds for profit.

[RumNCoke (Samantha Eaton)]

Is there anyway to get it back via daca protection?

[Engelbert1969 (Steve H)]

Good point. They won’t do it for that reason. No business can write a blank cheque guarantee. I don’t get how they’re fine with us carrying the risk can instead of them tho. In light of a lack of response here, I’m struggling to get my head around this. They must have calculated enough people either won’t notice or won’t care so the extra revenue to them is worth it. Surely the higher worth account holders are more likely to move away to other brokers. Maybe Freetrade have factored that in too and they don’t care. For me a line is being crossed that blows out of the water all the positive moral high ground vibes around the Freetrade brand. But maybe it’s just me. I’ll give it a couple of weeks to see how things are looking then my SIPP is out of here. Then the question is, do I go thru the hassle of selling GIA stocks and putting the money in the ISA or just shift the lot to a broker where I control my risk not them.

[afreeb (Andy Freeburn)]

@GoFundYourself

If your Lendable Securities are already on loan (i.e. we have exercised our right to use your Lendable Securities under this section 24.2) and you decide to sell an amount of the securities in your Freetrade Account that will mean selling the Lendable Securities, a recall process will be initiated. The recall process will involve returning your Lendable Securities to you, at which point your sell instruction will be completed. This recall process may delay the time it takes to settle your sell instruction (however this should not normally be the case).

This is the bit that concerns me the most… ‘This recall process MAY DELAY the time it takes to settle your sell instruction’ - as we’ve seen recently with volatile markets - delays in settling a sale because you are recoviering my shares that you have lent out to earn you a profit could have massive financial implications to me and doesn’t sit very well with a great customer first approach that i’ve come to expect…

[Engelbert1969 (Steve H)]

Don’t want to sound like a cracked record (remember them?) but this is another case where Freetrade should take the risk but can’t. So it’s left with the customer

[RumNCoke (Samantha Eaton)]

What will happen if most higher net worth individuals (for want of a better term) go elsewhere or manually bed & ISA everything.

The share lending plan would be pretty flat?

[Kiava]

Yolo