Are you looking to earn passive income on the stocks you already own? Well, online brokerage platform Robinhood has just launched a share lending program in the U.K. that allows consumers to do just that. This new feature enables retail investors in the U.K. to lend out their stocks to interested borrowers, earning a monthly fee in return.
Stock lending, also known as securities lending, is a practice where you temporarily loan out your stocks to another party, typically a financial institution. In Robinhood’s case, shares lent out via the app are treated as collateral, with interest being paid out monthly to lenders. Customers can also earn cash from company dividend payments owed by the borrower.
But why should you consider stock lending with Robinhood? Well, for starters, it’s a unique way to put your investments to work and earn passive income. Plus, Robinhood aims to hold cash equal to a minimum of 100% of the value of your loaned stocks at a third-party bank, providing some level of protection in case of default.
While stock lending is not unheard of in the U.K., it is still considered a niche product. Several firms offer similar programs, but Robinhood’s offering stands out with its intuitive mobile app and lower interest rate for lenders. As a U.S.-based firm, Robinhood is behind the risk management and selection of borrowers, ensuring a low risk for users.
This new product offering from Robinhood is not only a way to earn passive income but also a test for the company to gauge the acceptance of new product innovations by local regulators. With the strict regulations in the U.K. around investment products, Robinhood’s share lending program could pave the way for future financial services offerings in the market.
If you’re looking for a way to earn extra cash on your stocks and diversify your investment portfolio, consider exploring Robinhood’s share lending program. With the potential to earn passive income while still retaining ownership of your shares, it’s a win-win situation for investors looking to maximize their returns.