1. About these Share Lending Terms
1.1 From the date that you give us your consent to these Share Lending Terms, they form part of the legally binding agreement between you and us.
1.2 Where the Share Lending Terms apply, they do so in addition to the general Terms and Conditions. If these Share Lending Terms say anything that is inconsistent with the general Terms and Conditions, the Share Lending Terms will apply.
1.3 Some of the words used in these Share Lending Terms are capitalised. These have a special meaning which is set out in section 14 below or in Part E of the general Terms and Conditions.
1.4 These Share Lending Terms will always be available on our website, and you'll be able to download or print them.
1.5 If there's anything about these Share Lending Terms that you're unsure about, you can email us at hello@freetrade.io.
2. Your consent to Share Lending
2.1 You will have been invited to give us your express consent to these Share Lending Terms via the Freetrade App. If we do not have your express consent to these Share Lending Terms, we will not use your Shares for share lending.
2.2 You can withdraw your consent to these Share Lending Terms at any time via the Freetrade App. If you withdraw your consent, we will return any Lent Shares to you as soon as possible (usually within 3 business days) and will stop using your Shares for new share lending. This means that you will stop accruing any share lending Income on your Shares.
3. Our right to use your Shares
3.1 If you have given us your consent to these Share Lending Terms, we will have the right to use Shares, including Fractionals, in your Freetrade GIA and (if applicable) your Freetrade SIPP from time to time for our share lending activities as described in these Share Lending Terms.
3.2 We will not use any Shares in your Freetrade ISA for share lending.
4. How we can take your Shares
4.1 We can take some or all of your Shares from your Freetrade GIA and/or Freetrade SIPP. If we do this, those Shares become “Lent Shares” and are “On Loan”. We can decide whether to take your Shares, which to take and how many to take.
4.2 We can take Fractionals as well as whole Shares. This means that share lending can cause you to hold Fractionals in your account until the On Loan Fractionals are returned. Holding Fractionals carries some additional risks for you, especially if we were to go insolvent. See section 20.8 of the general Terms and Conditions for more information. You can still sell whole Shares or Fractionals as normal as described at 5.2 below.
4.3 Your Shares that are not On Loan are “Unlent Shares”. These are held for you in our client assets account in accordance with section 20 of the general Terms and Conditions. You remain the beneficial owner of your Unlent Shares unless and until they become Lent Shares.
4.4 You do not have any ownership of your Lent Shares. They will no longer be held for you and will be taken out of our client assets account. You agree that when we do this we become the owner of those Lent Shares in order to lend them to a third party borrower (a “Borrower”).
4.5 Before we put your Shares On Loan we will ensure that we hold a sufficient amount of cash or assets (“Collateral”) for you in our client assets or client money account as required by the FCA Rules. You will have beneficial ownership of the Collateral. The amount of Collateral we hold for you is adjusted daily to make sure it is at least equal to the value of your Lent Shares. This is designed to ensure that you own something of equivalent value to your Lent Shares in case we do not return them to you. Although the Collateral is held for you, you can’t use it to trade with.
5. How we will return your Lent Shares
5.1 We can return your Lent Shares to you at any time. We will also return your Lent Shares to you if we need to in order to carry out a sale or transfer of those Lent Shares for you, or if you withdraw your consent to share lending. Lent Shares that are returned to you will usually take up to 3 business days to arrive in your Freetrade Account, although we may let you sell them before this happens.
5.2 When we return your Lent Shares they become Unlent Shares again, they are no longer On Loan, and they will be held for you in our client assets account in accordance with section 20 of the general Terms and Conditions. You will have beneficial ownership over them.
5.3 Once your Lent Share becomes an Unlent Share, we will stop holding Collateral for you in respect of it and you will cease to have ownership in that Collateral.
5.4 In some circumstances, we may delay a sale or transfer of your Lent Shares for you for a short time if there is a delay in our ability to get your Lent Shares back from a Borrower on the usual timeframe. If there is a delay we will take all reasonable steps to buy your Lent Shares from elsewhere in accordance with market practice, in order to effect the sale or transfer.
5.5 A delay in returning Lent Shares may mean that, if you have asked us to sell those Lent Shares, we cannot settle that sale on time or at all. This may delay your ability to withdraw the proceeds, but we will take reasonable steps to limit the impact of this on you.
5.6 Until we return your Lent Shares to you you will remain entitled to the Collateral. If we ultimately cannot return the Lent Shares to you, then you will be able to take the Collateral that we hold for you. In these circumstances the Collateral will usually be given to you as cash.
6. Dividends
6.1 We will pay amounts to you that are equivalent to any dividend or other income payments that are made from the issuer in respect of your Lent Shares.
6.2 You will receive dividends and other income in respect of your Unlent Shares in the normal way in accordance with the general Terms and Conditions.
7. Proxy voting
7.1 You may not be able to exercise proxy voting rights in relation to your Lent Shares. However, if you ask us, we will take reasonable steps to return your Lent Shares to you so that you can do so.
7.2 You will be able to exercise proxy voting rights in relation to your Unlent Shares in the normal way in accordance with the general Terms and Conditions.
8. Lending fees that we receive from Borrowers
8.1 We will receive lending fees from Borrowers when we lend Shares to them.
9. Share Lending Income
9.1 If your Shares are On Loan, we will pay you share lending Income. The income will be equal to 50% of the lending fees that we receive from Borrowers in respect of your Lent Shares.
9.2 Your Income is calculated daily and paid to you monthly.
9.3 We also share our lending fees with the partners who facilitate our share lending activities. We pay this out of the 50% of the fees that we retain, so the amount that we pay to them does not affect how much Income you will receive. You can see how much we pay to our share lending partners here.
10. Changes to these Share Lending Terms.
10.1 We may make changes to these Share Lending Terms in accordance with section 24 of the general Terms and Conditions.
10.2 If you're unhappy with a change we've made or are planning to make to the Share Lending Terms, you can withdraw your consent to share lending as described at section 2.2 above.
11. Statements
11.1 Your regular statement will include details of the Collateral we hold for you and which Shares have been Lent Shares in that period. We’ll also give you a regular statement setting out the Income paid to you.
12. Stopping or suspending share lending
12.1 Subject to section 12.4, we can terminate these Share Lending Terms at any time on immediate notice to you. If we do this, we will stop using your Shares for our share lending activity and you will stop accruing any Income.
12.2 Subject to section 12.4 we can temporarily suspend our share lending activity on immediate notice to you. If we do this then, during the suspension, we will stop using your Shares for our share lending activity and you will stop accruing any Income.
12.3 We can lift any suspension under 12.2 on immediate notice to you.
12.4 Circumstances in which we may decide to terminate these Share Lending Terms or suspend share lending activity under this section 12 include where:
(a) we reasonably believe that it is necessary for us to comply with Applicable Requirements, new industry guidance that we have to follow, or the directions of an ombudsman or regulator;
(b) we are doing so to ensure that our share lending activities do not expose us or you to an inappropriate level of risk;
(c) it is due or in response to an operational issue, failure or outage that materially impacts on our ability to carry out share lending;
(d) we have reasonable grounds to believe that lending your Shares in not in your best interests;
(e) there are other circumstances which mean that it is fair and reasonable for us to do so.
Where possible, we will give you reasonable notice of any termination or suspension under this section 13, unless we are prevented from doing so by Applicable Requirements.
13 Definitions
13.1 In these Share Lending Terms, the following words have the meaning set out below:
“Borrower” means a person to whom we lend Shares as part of our share lending activity.
“Collateral” has the meaning given in section 4.5;
“Lent Shares” means your Shares that are On Loan at the relevant time.
“On Loan” means a Share that we have taken in accordance with these Share Lending Terms in order to lend it to a Borrower.
“Income” means the amount that we pay to you in respect of your Lent Shares, as described at section 9.1.
“Shares” means shares in companies (including exchange traded funds, exchange traded commodities, foreign depositary receipts and other exchange-traded shares), and includes Fractionals of those shares;
“Unlent shares” means your Shares that are not On Loan at the relevant time.
General Investment Account
