The Stock Yield Enhancement Program provides the opportunity to earn extra income on the fully-paid shares of stock held in your account by allowing IBKR to borrow shares from you in exchange for collateral either U. Treasuries or cash , and then lend the shares to traders who want to sell them short and are willing to pay interest to borrow them. To enroll, please login to the Client Portal. Once logged in, click the User menu head and shoulders icon in the top right corner followed by Manage Account.
Select the checkbox on the next screen and click Continue. You will then be presented with the requisite forms and disclosures needed to enroll in the program.
Once you have reviewed and signed the forms, your request will be submitted for processing. Please allow hours for enrollment to become active. For enrollment via Classic Account Management, please click on the below buttons in the order specified.
What is the purpose of the Stock Yield Enhancement Program? The Stock Yield Enhancement program provides customers with the opportunity to earn additional income on securities positions which would otherwise be segregated i. Customers who participate in the program will receive collateral either U. Treasuries or cash to secure the return of the stock loan at its termination. What are fully-paid and excess margin securities? How is the income received by a customer on any given Stock Yield Enhancement Program loan transaction determined?
The income which a customer receives in exchange for shares lent depend upon rates in the over-the-counter securities lending market. These rates can vary significantly not only by the particular security loaned but also by the loan date.
How is the amount of collateral for a given loan determined? The collateral either U. There are different industry conventions per currency. Below is a chart of the various industry conventions per currency:. How and where is the collateral held for loans in the Stock Yield Enhancement Program? The collateral for your loans under the Program will be held by IBKRSS in an account for your benefit over which you will have a perfected first priority security interest.
Please reference the Securities Account Control Agreement for additional details here. For non-IBLLC customers the collateral will be held and protected by the entity carrying the account. Interest also ceases to accrue on the next business day after the transfer input or un-enrollment date. In addition, Financial Advisor client accounts, fully disclosed IBroker clients and Omnibus Brokers who meet the above requirements can participate.
In the case of Financial Advisors and fully disclosed IBrokers, the clients themselves must sign the agreements. For Omnibus Brokers, the broker signs the agreement.
The cash account must meet this minimum equity requirement solely at the point of signing up for the program. If the equity falls below that level thereafter there is no impact upon existing loans or the ability to initiate new loans. How does one terminate Stock Yield Enhancement Program participation? To un-enroll, please log into the Client Portal. Uncheck the checkbox on the next screen and click Continue.
Your request will be submitted for processing. Please allow hours for the un-enrollment request to be fully processed. If an account signs up and un-enrolls at a later time, when can it be re-enrolled into the program? After un-enrollment, the account may not re-enroll for 90 calendar days.
Is there any restriction on lending stocks which are trading in the secondary market following an IPO? No, as long as the account does not have any restrictions in place for eligible securities held in the account. How does IBKR determine the amount of shares which are eligible to be loaned? The first step is to determine the value of securities, if any, which IBKR maintains a margin lien upon and can lend without client participation in the Stock Yield Enhancement Program.
The debit balance is determined by first converting all non-USD denominated cash balances to USD and then backing out any short stock sale proceeds converted to USD as necessary. In addition, cash balances maintained in the commodities segment or for spot metals and CFDs are not considered. For a more detailed explanation please see here. USD rate of 1. All securities are deemed fully-paid as cash balance as converted to USD is a credit.
Will IBKR lend out all eligible shares? There is no guarantee that all eligible shares in a given account will be loaned through the Stock Yield Enhancement Program as there may not be a market at an advantageous rate for certain securities, IBKR may not have access to a market with willing borrowers or IBKR may not want to loan your shares. Are Stock Yield Enhancement Program loans made only in increments of ?
Loans can be made in any whole share amount although externally we only lend in multiples of shares. Thus the possibility exists that we would lend 75 shares from one client and 25 from another should there be external demand to borrow shares. How are loans allocated among clients when the supply of shares available to lend exceeds the borrow demand?
In the event that the demand for borrowing a given security is less than the supply of shares available to lend from participants in the Stock Yield Enhancement Program, loans will be allocated on a pro rata basis.
Are shares loaned only to other IBKR clients or to other third parties? Shares may be loaned to both IBKR clients and to third parties. The program is entirely managed by IBKR who, after determining those securities, if any, which IBKR is authorized to lend by virtue of a margin loan lien, has the discretion to determine whether any of the fully-paid or excess margin securities can be loaned out and to initiate the loans.
Are there any restrictions placed upon the sale of securities which have been lent through the Stock Yield Enhancement Program? Loaned shares may be sold at any time, without restriction. In addition, the loan will be terminated on the open of the business day following the security sale date.
Can a client write covered calls against stock which has been loaned out through the Stock Yield Enhancement Program and receive the covered call margin treatment? In the case of Financial Advisors and fully disclosed IBrokers, the clients themselves must sign the agreements. For Omnibus Brokers, the broker signs the agreement.
The cash account must meet this minimum equity requirement solely at the point of signing up for the program. If the equity falls below that level thereafter there is no impact upon existing loans or the ability to initiate new loans. To enroll, please login to the Client Portal. Once logged in, click the User menu head and shoulders icon in the top right corner followed by Manage Account.
Select the checkbox on the next screen and click Continue. You will then be presented with the requisite forms and disclosures needed to enroll in the program. Once you have reviewed and signed the forms, your request will be submitted for processing. Please allow hours for enrollment to become active.
How does one terminate Stock Yield Enhancement Program participation? To un-enroll, please log into the Client Portal. Uncheck the checkbox on the next screen and click Continue.
Your request will be submitted for processing. Please allow hours for the un-enrollment request to be fully processed. If an account signs up and un-enrolls at a later time, when can it be re-enrolled into the program?
After un-enrollment, the account may not re-enroll for 90 calendar days. Is there any restriction on lending stocks which are trading in the secondary market following an IPO?
No, as long as the account does not have any restrictions in place for eligible securities held in the account. How does IBKR determine the amount of shares which are eligible to be loaned? I also have a big disclaimer telling me that the loan is only protected by the collateral and not by CIPF: Important Notice re: CIPF Protection for Loans of Fully Paid and Excess Margin Securities: Please be aware that if you execute loans of your fully paid or excess margin securities, the Canadian Investor Protection Fund will not protect you with respect to the securities loan transaction.
Therefore, the cash collateral credited to your account by Interactive Brokers see above will constitute the only source of satisfaction in the event that Interactive Brokers cannot return the securities. If you have dividend stocks in a taxable account, you might not want to do it. If you get a dividend payment in lieu, then it will be taxed at a higher rate than if you received the dividend.
I mean link from my then previous post. Because the investor owned the stock on the ex-date, the dividend will automatically be paid regardless of whether the investor still owns the stock by the time it is constructively received. The high turnover generated by this strategy makes it popular with day traders and active money managers. Because investors purchasing the stock on the ex-dividend date do not receive the dividend, the price of the stock should theoretically fall by the dividend amount.
In practice, however, this does not always happen and is the reason why investors utilize the dividend capture strategy. Essentially, the dividend capture strategy aims to profit from the fact that stocks do not always trade in strictly logical or formulaic ways around the dividend dates.
Probably the greatest benefit of using this strategy to capture dividends is that there are thousands of dividend-paying stocks to choose from, and some pay higher dividends than others, albeit with greater risk and volatility. An experienced capture strategist can find a stock with an ex-dividend date for every day of the month.
By buying stocks the day before the ex-date each day, theoretically he or she could capture a dividend every trading day of the year in this manner. Obviously, this could lead to big profits if the dividend payouts are reasonably high. This strategy also does not require much in the way of fundamental or technical analysis. A subscription to a detailed dividend calendar that provides a comprehensive list of all of the companies that will declare and pay upcoming dividends is perhaps the only research tool that is really necessary for success.
See our complete Ex-Dividend Calendar. Although capturing dividends can be an easy way to make quick income, it comes with several drawbacks. A list of the major disadvantages includes:. This fact makes capturing dividends a much more difficult process than many people initially believe. However, the underlying stock must be held for at least 60 days during the day period that begins prior to the ex-dividend date.
Capture strategists will seldom, if ever, be able to meet this condition. Be sure to read more about the difference between Qualified and Unqualified Dividends.
Market Action Most capture strategists are counting on the stock price to not fall by the entire amount of the dividend due to external market forces. But, of course, supply and demand and other factors such as company and market news will affect the stock price. While the capture strategist hopes that the adjustment is less than the dividend, these forces can often push the price in the wrong direction and more than offset the dividend payment with a capital loss.
This issue is further exacerbated by institutions and day traders seeking to profit from the inevitable reactionary price movements that occur when dividends are declared and paid.
Of course, it should be noted that this volatility can also result in additional gains as well as losses in many cases. An example of this disadvantage can be seen with Walmart WMT :. Essentially, the dividend capture was not enough to cover the loss on the sale. This is a great example of how precise timing is crucial.
Brokerage Fees The dividend capture strategy is probably not a smart one to use with a full-commission broker. A large amount of principal is required to begin with, and trading large blocks of shares on a daily basis can easily result in commissions being paid that far outweigh the dividends received. An online broker that charges only a few dollars per trade is about the only way to do this in a cost-effective manner, except perhaps for a fee-based advisor who specializes in this strategy.
Traders who buy on margin also need to be aware of how much interest they are paying to get a larger dividend. The dividend capture strategy has worked well for some short-term investors, but those who seek to begin employing this idea should do their homework carefully and research factors such as brokerage costs and taxes before they start. For more information on dividend capture strategies, consult your financial advisor.
Dividend Investing Ideas Center. Have you ever wished for the safety of bonds, but the return potential If you are reaching retirement age, there is a good chance that you Guide to Dividend. Industry Dividends. Clean energy. Precious metals. Natural resources. Energy Infrastructure. Cruise lines.