IB Stock Yield Enhancement Program
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IB Stock Yield Enhancement Program
What's your opinion about this http://www.interactivebrokers.com/en/so ... rogram.php
Re: IB Stock Yield Enhancement Program
If you own a stock or bond etf, then the etf manager may be doing this anyway and not paying you for it 
. In the UK there is no limit to the extent a manager can do that. One FTSE250 etf had 90% of constituent shares lent out last year and the ishares gilt etf had 50% of the bonds lent out. The danger is that the borrower may not be able to return them. I think if you hold stocks on a margin account, then most brokers just lend them out without asking you. Perhaps the only difference here is that this broker has the decency to say what they are doing and to hand back 50% of the proceeds.
. In the UK there is no limit to the extent a manager can do that. One FTSE250 etf had 90% of constituent shares lent out last year and the ishares gilt etf had 50% of the bonds lent out. The danger is that the borrower may not be able to return them. I think if you hold stocks on a margin account, then most brokers just lend them out without asking you. Perhaps the only difference here is that this broker has the decency to say what they are doing and to hand back 50% of the proceeds."Good judgment comes from experience. Experience comes from bad judgment." - Mulla Nasrudin
Re: IB Stock Yield Enhancement Program
This looks like a very nice way to juice yields on long equity positions. IB is a very upstanding brokerage and I would trust them, more than anyone else I know, to manage risk appropriately. They mention cash collateral because these loans are not SIPC protected. I'm pretty sure that even if the shares aren't returned for whatever reason, IB will still make you whole. First of all, they are not allowing people to borrow shares unless they maintain very strict margin requirements, so, in a worst case scenario where someone shorted a stock and took a huge loss, the margin call from IB would require liquidation of other assets in the short loser's account and you would still get your money. I don't believe IB would allow someone to short a position in such a leveraged way that margin liquidation would not make IB whole again.
"I came here for financial advice, but I've ended up with a bunch of shave soaps and apparently am about to start eating sardines. Not that I'm complaining, of course." -ZedThou
Re: IB Stock Yield Enhancement Program
Wow! Risk-free money. What's not to like about that? 
Re: IB Stock Yield Enhancement Program
I used IB for years, when I was trading a lot. They are really geared for traders. If you don't trade much you will end up paying about $20.00 per month in minimum fees. That is $240 per year in account maintenance. When I stopped trading every day, I felt that was an unneeded expense. So I closed my accounts with them.
Yes they have great margin interest rates, low commissions, access to just about every market on earth, and they can pay you for lending your stock. Maybe a good deal if you do some aggressive stuff in your VP. The also have some of the best reports and statement generators around.
I do not use them for the PP, since so little trading is done in that.
Yes they have great margin interest rates, low commissions, access to just about every market on earth, and they can pay you for lending your stock. Maybe a good deal if you do some aggressive stuff in your VP. The also have some of the best reports and statement generators around.
I do not use them for the PP, since so little trading is done in that.
Steve G