RE: Encouraging no buy quotes now12 Aug 2025 14:35
'Share lending
We’ve unlocked a new source of passive income for your portfolio. Learn more about how it works.
Participating in share lending carries risks. Share lending returns vary month-to-month. Read more about these risks below.
Key terms
Share lending: The practice of loaning shares out to others in exchange for a fee.
Share lending yield: The annualised return a customer receives from participating in share lending.
Calculated as:
(Monthly cash distribution received / ave market value of eligible shares) * 12
Example:
(£0.10 / £1,000) * 12 = ~ 0.0012 or 0.12%
Eligible shares: All UK and US shares held in a General Investment Account (GIA) or Self Invested Pension Plan (SIPP). This includes ETFs and investment trusts. Shares held in ISAs are not eligible for share lending. We do not currently lend European shares or ETFs which have been assigned low risk ratings by their manufacturers.
Income distribution: Participants in the share lending programme will receive 50% of the income generated when their shares are on loan, after lending partner fees are deducted.
What is share lending?
Share lending plays an important role in global financial markets, creating liquidity, as well as enabling hedge funds and other investors to engage in short selling strategies.
The practice in its current form began to take shape in the 1960s, when institutions called market makers began borrowing shares to settle sales on behalf of their clients.
In the following decades, the practice became more common, as mutual or “long only” funds began lending shares that they held to offset custody fees.
Since the Global Financial Crisis, share lending has undergone significant standardisation and global regulators have introduced measures to oversee the practice, adding significant protections for lenders and borrowers.
Today, the biggest lenders of shares include ETFs, pension funds, and insurance companies. Borrowers are typically banks, hedge funds, or brokers that need shares to “sell short”, support settlement, or to facilitate market making.
At a high level, a lender temporarily transfers ownership of shares that they hold to a borrower. In return, the borrower will transfer cash or other high-quality and liquid assets (like government bonds) to the lender. In return, the borrower will pay a fee to the lender.'
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