Swissquote Launches New Stock Lending Program

Swissquote, licensed as a Swiss broker and bank, recently rolled out an expansion of its services by offering a program for stock lending. The company made the announcement this past Thursday, stating that the program would enable customers to earn an excess of 5 percent on specific lent stocks.

Swissquote Introduces Stock Lending

In the early stages, Swissquote will limit lending to a select range of stocks and exchange-traded funds. However, future plans involve the inclusion of a broader array of asset categories. While the annual yield can surpass 5 percent for certain stocks, the rate largely depends on demand, resulting in a net client return rate of up to 1 percent per year for loaned securities, paid out monthly.

Securities lending provides an avenue for physical security holders to lend shares to other market entities in return for a fixed yield. This service enables them to accrue interest on the lent stock in addition to regular dividends.

“Securities lending was a lucrative option, predominantly for large-scale investors,” Swissquote’s Chief Sales and Marketing Officer, Jan De Schepper, said. “After a successful initial phase in Luxembourg, Swissquote decided to extend this opportunity to all clients, irrespective of portfolio size (excluding US clients), offering them an easy way to generate additional passive income from their existing securities.”

How Swissquote Ensures Security in the Program

Swissquote has offered securities lending to all its private clients via their bank account and app, with no minimum deposit requirement. The company also underscored that joining the program would require customers to actively register and accept an agreement, ensuring they comprehend the potential risks involved.

“Only reliable, top-tier banks and financial institutions can borrow securities, which are needed for maintaining capital market operations smoothly,” Swissquote clarified in the official announcement. “These institutions often need to borrow assets to ensure trades are settled on time, or as collateral.”

The service expansion follows Swissquote’s remarkable financial performance in 2023 when the company reached “unprecedented financial milestones.” The net revenue of the company stood at around CHF 530 million for the year, and the company expects a pre-tax profit of no less than CHF 255 million. Moreover, Swissquote has also ventured into the digital banking sector recently.