This program gives you the opportunity to potentially earn extra income from the securities you already own by loaning them to Schwab while you maintain full economic ownership. Schwab typically loans the shares to third parties (brokers, traders, hedge funds) for a fee, which is then shared with you.
Who is eligible for the Securities Lending Fully Paid Program?
Currently, most accounts are eligible. However, it should also be noted that employer‑sponsored retirement plan accounts like 401(k)s are not eligible under ERISA rules.
How do I enroll in the program?
Clients who have received an eligible offer may digitally enroll via the Securities Lending Fully Paid dashboard located at Accounts > Securities Lending.
Please note: If your account is ineligible for online enrollment, you will receive a link to download the enrollment form. Please complete and submit via the Secure Message Center or fax to Schwab at 800-977-6156.
What is needed to enroll in the Securities Lending Fully Paid Program?
You are required to meet certain eligibility requirements prior to acceptance into the Securities Lending Fully Paid Program. Clients will be required to review and acknowledge the enrollment form prior to enrollment.
Will I pay any fees to participate in the program?
No, there are no fees associated with the program.
How do I earn income?
Schwab charges borrowers for the loan of your securities and collects fees that will be shared with you. The interest you earn is based on market demand and will be paid on a monthly basis.
Hypothetical income example (based on 360‑day annualized lending rate of 10.5%):
| Market value of loaned shares | $50,000 |
| Daily accrual | $14.58 |
| Monthly income | $437.50 |
| Charles Schwab portion | $218.75 |
| Client portion | $218.75 |
For illustrative purposes only. Past performance is not a guarantee of future results.
Where can I review my loan activity and accrual?
You will be able to see your loaned shares, collateral, and the rate you are earning online daily by going online to Accounts > Securities Lending.
What securities will be loaned out?
Upon enrollment, all fully paid securities will be eligible to loan; however, market demand will drive which securities may be loaned out. Demand and pay rates vary by security and over time.
How are lending rates determined?
Each security has its own lending rate based on demand and is subject to change daily.
Can I still sell the security while it is out on loan?
Yes, you may remain invested and can sell the securities as usual within the supplemental account. However, once the securities on loan are sold, the loan will terminate, and you'll stop receiving loan interest.
What is a supplemental account?
Once enrolled in the Securities Lending Fully Paid Program, a supplemental account will be created as a clone of the original account. This account will house your securities on loan and if the loan is terminated by you or Schwab, we will journal the shares back to the original account. If you want to sell your securities while on loan, please enter your sell order in the supplemental account. If the order executes, the proceeds will journal to your original account on the settlement day. Also, all loan income is first paid into the supplemental account, and then on the second business day of the month, the funds will be transferred to your original account.
Where will the collateral be held?
Schwab will fully secure loans through the program with FINRA‑approved methods of collateral (cash or U.S. Treasury bills and Treasury notes) that are held at Charles Schwab Trust Company, our third‑party administrator.
How do I opt out or unenroll?
You can opt out or unenroll by calling the Securities Lending Services team at 877-793-8872 between 8:30 a.m. and 4:00 p.m. EST.
What risks are involved?
Fully paid lending isn't appropriate for everyone. Clients with very short-term liquidity needs or who do not understand the risks should not consider the program.
A primary risk is counterparty default. Schwab is your counterparty on Securities Lending Fully Paid transactions. In the unlikely event of a default by Schwab, you can draw upon the collateral held by Charles Schwab Trust Company.
Please review the FAQs to gain a better understanding of the program benefits and risk considerations.
How will dividends be handled within the Securities Lending Fully Paid Program?
Substitute payments will be provided in lieu of dividends and are taxed differently than dividends. Consult your tax professional for further details.
Will I continue to have voting rights for shares on loan?
No, voting rights are forfeited for shares on loan, but the client will retain voting rights for any shares of that security that are not on loan.
How will SIPC coverage be impacted?
SIPC will not cover the securities position on loan. However, the loan will be backed by 102% collateral held at Charles Schwab Trust Company.