Securities Financing

Stock Yield Enhancement Program

Earn extra income on the fully-paid shares of stock held in your account by joining IB's Stock Yield Enhancement Program. This plan allows IB to borrow shares from you in exchange for cash collateral, and then lend the shares to traders who want to sell them short and are willing to pay a fee to borrow them. Each day that your stock is on loan, you will be paid a loan fee based on market rates.

Benefits

Simple and Automatic

IB manages all aspects of share lending. Once you register, IB will examine your fully-paid stock portfolio automatically. If you have stocks that are attractive in the securities lending market, IB will borrow the stocks from you, deposit collateral into your account and lend the shares. It's that simple.

Complete Transparency

When your stock is loaned out, you will see the fee rate that you are being paid on the loan along with the exact management fee you pay to IB. Other brokers with similar programs generally do not disclose the market rates to you, which allows them to pay you a small piece of the pie while holding on to most of the profits.

Example:

XYZ is currently trading at $75.00/share. You're long 5000 shares of XYZ, with a market value of $375,000.00. XYZ is in demand and commands a loan fee of 9%.

You Could Earn $16,875.00/year on Stock You Already Own

You sign up for IB's Stock Yield Enhancement Program, and IB loans out your 5000 shares of XYZ at 9%. The loan income on the transaction is $375,000.00 x 9% = $33,750.00, minus the 50% IB Management Fee = $16,875.00 to you.

Eligibility

The Stock Yield Enhancement Program is available to eligible IB clients⁰³ who have been approved for a margin account, or who have a cash account with equity greater than 50,000 USD.

Considerations and Risks

• Shares loaned out may not be protected by SIPC
  The Securities Investor Protection Act of 1970 may not protect shares loaned out. This is why under SEC rules IB must provide you with cash collateral in the same amount as the value of your shares to protect you in the very unlikely event that the stock is not returned to you.
• Shares loaned out are typically used to facilitate short sales
  Shares are attractive in the stock loan market because other traders want to borrow and sell them short, possibly affecting the value of the shares.
• Potential adverse tax consequences from receiving cash Payments in Lieu of Dividends on loaned shares
  When you lend stocks, you receive the full equivalent of all dividends. However, because you have loaned the stock, the cash you receive "in lieu of" dividends may be taxed as ordinary income instead of at the qualified dividend rate of 15%.² IB will try to return shares to you prior to a dividend to reduce or avoid any potential negative tax consequences.

For More Information

• For a complete discussion of the risks and characteristics of the program, click here.
• Sign up for IB's Stock Yield Enhancement Program on the Trading Configuration or Trading Permissions page in Account Management.

Availability List

IB clients who only execute through IB, but do not use IB as their clearing broker or custody agent ("Non-Clearing Customer"), may click here for a list of valid Market Participant Identifier (MPID) codes to be entered with their short sale orders.