Securities Lending

What is securities lending?

Securities lending is the temporary transfer of securities, such as shares, to a third party. In return, you receive a lending fee. The borrower is obliged to return the same securities to you at the end of the agreed lending period.

Why are securities lent out?

For the investor, securities lending is a way to generate additional income from an investment portfolio. At the same time, the borrowing parties, such as banks and institutional investors, gain access to securities they require to settle transactions or implement trading strategies.

Do you remain the owner of your securities when they are lent out?

Yes. You remain the beneficial owner of your securities, meaning you retain the economic benefits of your investment. Legal title is temporarily transferred to the borrower, who is obliged to return the same securities to you at a later date.

Which securities can be lent through our Securities Lending Programme?

Listed shares and exchange-traded funds (ETFs) may be lent, provided there is market demand. Securities are only lent when another market participant wishes to borrow them. If there is no demand, no lending takes place.

Can you choose which securities are lent?

No. Once you activate securities lending for your securities account, all listed shares and ETFs held in that account are, in principle, eligible for lending. The selection process is fully automated and based on predefined eligibility criteria and market demand. You do not need to take any further action.

Securities lending is enabled on your account, but nothing is happening. Is this normal?

Yes. Simply enabling securities lending on your account does not mean your securities will automatically be lent. Whether your securities are actually lent depends entirely on market demand.

What happens to dividends on securities that are on loan?

If a dividend is paid while one of your securities is on loan, you will receive a compensation payment that is economically equivalent to the dividend you would otherwise have received. As a result, you should not be economically disadvantaged by lending your securities. The exact tax treatment may differ.

Can you vote at a shareholders' meeting if your securities are on loan?

No. While your securities are on loan, the voting rights are temporarily transferred to the borrower. As a result, you cannot vote at shareholders' meetings during that period.

If you wish to vote at a shareholders' meeting, the securities can generally be recalled before the meeting. However, we advise you to deactivate securities lending at least one week prior to the meeting.

What are the risks associated with securities lending?

Securities lending involves risks, including the possibility that the borrower may fail to return the securities, as well as market and operational risks. Within our Securities Lending Programme, these risks are mitigated through a range of measures, including collateral amounting to 105% of the value of the securities on loan, daily monitoring and comprehensive risk management procedures. In the event of a borrower default, the collateral may be used to buy back the securities on loan. However, these risks cannot be eliminated entirely.

For more detailed information about the risks associated with securities lending, please refer to the Specific Terms and Conditions of the Securities Lending Programme.

How can you monitor your securities on loan and your earnings with Keytrade Bank?

Our platform provides an overview of both active and closed lending transactions, as well as the income you have earned through securities lending. In addition, detailed monthly reports are available in the Documents section of your securities account.

When and how do you receive your securities lending fee?

The lending fee is paid monthly and is visible in the transaction history of your securities account. Each monthly payment represents the total income generated through securities lending during the relevant month and is credited to the cash balance of your trading account.

Can you easily opt in or out of the Securities Lending Programme?

Yes. You can activate or deactivate the programme for your securities account at any time. Please note, however, that activation and deactivation are not processed in real time.

What collateral is required under Keytrade Bank's Securities Lending Programme?

Borrowers are required to provide cash collateral in euros equal to 105% of the value of the securities on loan. The value of this collateral is monitored on a daily basis and adjusted whenever necessary.

Can you sell your securities while they are on loan?

Yes, you can always sell. Under our Securities Lending Programme, the return of your securities happens automatically when you are selling them.

Who benefits financially from securities lending?

As the lender, you receive a lending fee paid by the borrower. Keytrade Bank also receives a share of the lending income for administering the programme. After deduction of the costs payable to our service providers, the remaining lending revenue is shared equally between you and Keytrade Bank, with each party receiving 50%.

Is participation in the Securities Lending Programme mandatory if you have a securities account with Keytrade Bank?

No. Participation is entirely voluntary. You decide whether you wish to activate the Securities Lending Programme for your securities account.

How long are your securities lent out?

The duration of each loan varies from one transaction to another. Some loans last a couple of days, while others may remain outstanding for longer. In all cases, you can always sell.

How is the value of the collateral monitored?

We assess the value of the collateral on a daily basis. If the value of the securities on loan increases or the value of the collateral decreases, we require the borrower to provide additional collateral to ensure that adequate coverage is maintained.

Which investors may consider securities lending?

Securities lending may be relevant for investors who wish to generate additional income from their portfolio and who understand the associated risks. Whether it meets your needs depends on your investment objectives and your risk tolerance.