Fully Paid Lending
Through Fidelity's Fully Paid Lending Program, you can loan to Fidelity certain fully paid or excess-margin securities1 that Fidelity desires to borrow. In return, you gain the opportunity to earn incremental income on your portfolio through the securities lending market.
In the Fully Paid Lending Program, Fidelity can borrow fully paid and excess margin securities from your account. In return, you receive collateral held at a custodial bank independent of Fidelity. In addition, you receive an interest rate-based lending fee that is calculated by multiplying the loan rate by the market value of the securities on loan.
The lending fee accrues daily and is automatically credited monthly to your Fidelity Account.® The interest rates paid are based on the relative value of the individual securities in the securities-lending market and are subject to change based upon market conditions and borrowing demand.
The duration of the loan is typically indefinite and the loan may remain open until either you or Fidelity elects to close it. The existence of the loan does not restrict you from selling the securities at any time. However, sale of the securities on loan will be treated as a notification of termination for that particular loan. Loaned securities may be, or may become, "hard to borrow" because of short-selling, scarcity of available lending supply, or corporate events that may affect liquidity in a security.
You must execute a Master Securities Lending Agreement (MSLA) with Fidelity. The MSLA governs all loan transactions and gives Fidelity the right to borrow fully paid and excess margin securities from your account. It is a separate agreement from any previously executed margin agreement and the borrowing of securities under the MSLA is a separate process from rehypothecation pursuant to a margin agreement.
For illustrative purposes only.
- Only securities that have been fully paid for or are in excess of any margin debit are eligible.
- Certain eligibility requirements may apply. Please contact a Fidelity representative for more information.
- On a quarterly basis after your participation begins, you will be sent a letter listing all loans with Fidelity that have been open for more than 30 calendar days as of the end of the quarter.
- You maintain full economic ownership of the securities on loan and may sell the securities or recall the loan at any time.
- In the event of a default by Fidelity, you will have the right to withdraw the collateral from the custodial bank in the manner described in the agreements.
- Fidelity is not obligated to borrow securities at any time and enrollment in the program does not guarantee that your securities will be borrowed.
For more information on Fully Paid Lending, contact a Fidelity Representative.
1. Fully paid securities are securities in a customer's account that have been completely paid for. Excess-margin securities are securities that have not been completely paid for, but whose market value exceeds 140% of the customer's margin debit balance to National Financial Services LLC.
All references to Fidelity include National Financial Services LLC ("NFS") and Fidelity Brokerage Services LLC ("FBS"), Members NYSE, SIPC. All references to Fidelity Accounts refer to accounts carried by NFS on behalf of introducing brokers.
This information is intended to be educational and is not tailored to the investment needs of any specific investor
The Fully Paid Lending Program is only a means for increased income on certain securities and does not provide any downside protection or "hedge" against the customer's lending position(s) or portfolio.
The information provided herein is general in nature. Fidelity does not provide legal tax advice. Please consult an attorney or tax professional regarding any specific tax or legal situation.
Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client's investment decisions. Fidelity, and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in, and receive compensation, directly or indirectly, in connection with the management, distribution and/or servicing of these products or services including Fidelity funds, certain third-party funds and products, and certain investment services.