Stake Gives Investors A Piece Of The Pie With New Stock Lending Product
Leading digital broker Stake is once again breaking barriers for Kiwi retail investors with the launch of a New Zealand-first offering, Stock Lending. With Stock Lending, Stake investors will be able to earn passive income on the U.S. stocks they hold with Stake by allowing them to be lent out through the securities lending market.
“We’re driven to provide institutional access to the markets for our investors, and we’re excited to bring this first-of-its-kind product to all of our retail investors in New Zealand. Stock Lending has historically been only available to hedge funds and institutional investors. This product is an opportunity for investors to be in that game and earn passive income on their portfolios, no matter their size,” says Stake CEO and Founder, Matt Leibowitz.
Securities lending is when a security is lent to a borrower to enable practices such as stock arbitrage, index and ETF trading or hedging, and the borrower pays a fee. Similar to an interest payment for borrowing cash.
Many traditional brokers engage in securities lending, but typically keep the returns for themselves, with everyday retail investors seeing no benefit. With Stock Lending, Stake has reshaped the model to give customers a piece of the return from their stocks.
A seamless digital experience means investors can start earning income on their stocks without having to lift a finger, with a share of the borrowing fees being credited to their Stake account each month when their stocks are lent.
“This is the next step in our continued mission of taking our customers deeper into the markets, and unlocking new opportunities for retail investors where there hasn’t been access before,” says Matt.
Stock Lending will enable Stake to continue offering market-leading pricing for brokerage, starting with $0 brokerage for US Stocks and continuing with its forthcoming crypto and ASX offerings, while also generating passive returns for customers.
“The launch of this product will drive new revenue streams for us, but unlike other brokers, we’re giving our investors a piece of the pie. It’s a major milestone for Stake and we think it’s a great display of what modern brokerage should be, using our scale and technology to ensure further sustainability of our model, while also creating tangible returns and benefits for investors that don’t exist anywhere else,” added Matt.
Stock Lending will officially launch on Monday 11 July for U.S. securities. Investors have the ability to opt-out of Stock Lending freely through the settings section on Stake, and will be able to trade normally as usual.
This announcement of Stock Lending comes off the back of Stake recently completing a $90m Series A funding round, and the planned launch of a Crypto product taking place later this year, alongside ASX securities for New Zealand customers. All of these, combined with Stake’s market-leading $0 brokerage on more than 6,000 US stocks and ETFs will make it the one-stop wealth management platform of the future.
More information on Stock Lending can be found on Stake’s website here.
HOW DOES IT WORK?
Stock Lending is Stake’s take on securities lending. It’s when a broker lends stocks owned by investors out to a borrower – typically an institutional investor. In return, a borrowing fee is paid by that borrower to the broker, and a portion of that fee is shared back to investors who own that stock.
If a U.S. stock an investor holds is lent out, they will receive a Stock Lending Payment. This is the investor's share of the borrowing fee, paid to Stake by those who borrowed the stocks. The Stock Lending Payment will be credited to the investor’s account in USD as additional buying power.
Stake investors can continue trading their stocks as usual with Stock Lending switched on, and are protected by collateral held in cash in the unlikely event that a borrower can’t return borrowed stocks.
Stake does the heavy lifting. They connect investors' stocks to those interested in borrowing them. They manage everything so investors can sit back and get their clip of the ticket.
Since its launch in 2017, Stake has amassed over 500,000 customers globally including over 60,000 in New Zealand, and more than US$1.5 billion in funds under administration. This has been achieved by spearheading U.S. trading with a commission-free model.