Author Topic: Stock Yield Enhancement Program with Interactive Brokers  (Read 2340 times)

Kalergie

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Stock Yield Enhancement Program with Interactive Brokers
« on: July 29, 2017, 03:41:37 PM »
I just received an email from my Broker (Interactive Brokers) suggesting a new feature called Stock Yield Enhancement Program.

"You could 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 interest to borrow them. Each day that your stock is on loan, you will be paid interest on the cash collateral posted to your account for the loan based on market rates."

I'd love to hear what you think of this.


Financial.Velociraptor

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Re: Stock Yield Enhancement Program with Interactive Brokers
« Reply #1 on: July 29, 2017, 04:49:20 PM »
The interest rate paid is usually quite low.  Also, if you are holding a dividend payer; you will receive "payments in lieu" of dividends which will not qualify for 15% tax rate.  I turned mine off.

Kalergie

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Re: Stock Yield Enhancement Program with Interactive Brokers
« Reply #2 on: July 30, 2017, 12:38:34 AM »
Thanks for the info. Do you know of any potential risks that should be considered?

Financial.Velociraptor

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Re: Stock Yield Enhancement Program with Interactive Brokers
« Reply #3 on: July 30, 2017, 08:28:11 AM »
I can't imagine there is any risk.  You still own the shares.  Your counterparty has no information on you.  The counterparty is legally obligated to surrender the shares if you sell.

kenaces

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Re: Stock Yield Enhancement Program with Interactive Brokers
« Reply #4 on: July 30, 2017, 10:46:16 AM »
Intersting - I think many brokers already do this and just keep the interest unless you specifically opt out.

Kalergie

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Re: Stock Yield Enhancement Program with Interactive Brokers
« Reply #5 on: July 30, 2017, 03:19:32 PM »
I only hold VTI and VXUS. Can these even be shorted? I see conflicting info on that. If not, then there's absolutely no point participating in the program for me.