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Learn about share lending at Freetrade.
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screens showing share lending yield
Participating in share lending carries risks. Share lending returns vary depending on borrower demand. Read more about the risks.The illustration assumes a portfolio with £1,000 in shares on loan and a monthly yield of 0.02%.

Introducing share lending

Freetrade’s share lending programme allows you to generate additional income from shares that you own.

If you opt in, we will loan out your shares to borrowers when there is demand for them in exchange for a fee and collateral worth more than the value of your shares.

We only lend shares held in a GIA or SIPP. Shares held in an ISA aren’t eligible to be loaned.

You’ll keep 50% of all fees earned when your shares are on loan. The other 50% will be retained by Freetrade and our partners who help us operate the share lending programme.

You’ll still be able to sell your shares as normal, but you should be aware that there are some risks.
01
You will not be able to vote shares on loan
You can contact customer service if you want to vote your lent shares.
02
You may receive a manufactured dividend
We'll mark manufactured dividends in your annual tax certificate to help when preparing your tax return.
03
Shares on loan may be used for short selling
Short selling can put downward pressure on the share price.

How does share lending work?

Lock

Keeping your shares safe

There is a risk that the borrower does not return your shares, however we put in place arrangements to keep your shares safe
Opt-in and opt-out
We’ll only loan your shares out if you opt in to our share lending programme. If you opt-in and decide it’s not for you, you can opt out at any time through the profile screen in your app.
High quality collateral and borrowers
We hold government bonds worth more than the value of your shares and only loan your shares to high quality borrowers. We hold the collateral in accordance with the FCA’s client asset rules so that it will belong to you even if we were to go insolvent.
Freetrade will make you whole if a loan fails
In the event that a borrower did not return your shares, we would sell the collateral that we hold for you and repurchase your shares. In the unlikely event that the collateral was insufficient to repurchase your shares, we would make up the difference ourselves so that you don't lose out.
Freetrade is covered by the FSCS. Eligible customer investments may be covered up to £85,000 in the event of our insolvency.

To learn more, read our full terms, FAQ section on the Freetrade share lending programme, and a deep dive into how Share Lending works at Freetrade.

How much could you earn?

The amount of income you earn depends on the rates that borrowers are willing to pay for your shares and the number of shares you have on loan.

The rates paid by borrowers and the demand for shares vary from day to day.

In the table below, you can see a worked example of the amount of monthly income you could earn if £1,000 of your shares were on loan.
round graph

An illustrative example of monthly share lending income

Income is rounded down to the nearest penny.
educational page

Want to learn more about share lending?

FAQs

Here you'll find answers to the most frequently asked questions. If you have a question that's not listed, please contact support.
What is share lending and how does it work at Freetrade?

Share lending is when a shareholder makes short-term loans of shares to others in the market in exchange for a fee.

For Freetrade’s share lending programme, shares owned by participating customers are offered to borrowers.

If one of those borrowers chooses to borrow some of the shares, they pay a fee for each day that they borrow each share.

Most of the fees are generated by a small group of in-demand shares that can change quickly. It’s difficult to predict which shares will be in demand in the future.

Do I have to participate in share lending?

No. You decide whether or not you want to participate in share lending.

If you do opt in, you can opt out again later.

There's no minimum term and no limit on how often you can opt in and out.

How much could I earn?

This depends on a lot of factors, including the demand for shares that you own and the rates that borrowers are willing to pay. You'll earn 50% of the income generated by your shares.

Demand to borrow shares is volatile and difficult to predict. You should not select which shares to buy expecting to earn a return from share lending. The income that’s generated may help to generate a modest, additional return for your portfolio.

The rates that have been available in the market are laid out in more detail below. Remember that past performance does not predict future returns.

What does Freetrade earn?

Freetrade earns about 30% of the borrower fees. We pay 20% to our lending partners. The remaining 50% is shared with you.

What shares are lent?

All shares, investment trusts, and ETFs in GIAs and SIPPs are eligible to be lent.

Shares held in an ISA are not eligible to be lent. Currently, we do not lend European shares.

We won’t lend out any ETFs which the fund managers rate as being low risk, even if there is market demand for them.

On a typical day, most shares aren't on loan.

The specific shares that are on loan changes day-to-day depending on supply and demand in the share lending market.

You can see if any of your shares were on loan during the month on your monthly statement.

Learn more about the mechanics of share lending on our Educational Page.

How do you decide whose shares to lend?

Whenever we lend out a share, all customers who own that share line participate in that loan.

So, if 25% of our customers’ total holdings in a particular company are on loan, that means that 25% of the shares that you hold in that company will be on loan.

In that example, if you owned two shares in the company, 0.5 of your shares would be on loan, and 1.5 of your shares would not be on loan.

Who is borrowing my shares?

We only lend directly to a small group of large, global investment banks.

These borrowers lend the shares on to borrowers that might include mutual funds, hedge funds, investment banks or other market participants that have the need to borrow shares.

What are the risks?

There are a few risks that you should be aware of.

The borrower may not return your shares on time or at all.

In the event that a borrower does not return your shares, we will use the collateral to buy back your shares and we will cover any shortfall to make sure that you remain in the same position.

If the borrower does not return your shares, the collateral may not be enough to cover the cost of replacing the shares.

In that situation, we will pay for any shortfall, but there is a risk that we default and cannot return your shares.

We take steps to mitigate these risks, but we can’t eliminate them entirely.

You should read more about these risks and how we keep your shares safe in our Education Page.

What is collateral?

For any shares on loan, we take collateral from the borrower and hold it for you. We do this so that if the borrower does not return your shares, we can sell the collateral and use the proceeds to buy new shares for you.

We only accept government bonds as collateral. This is because they are low risk assets and are easy to sell quickly so that we can buy replacement shares as quickly as possible.

We make sure that the collateral is worth at least 105% of the value of the lent shares. We check this and adjust the amount of collateral that we hold at least once a day.

Learn more about the mechanics of share lending in our Education Page.

Do I receive dividends if I participate in share lending?

Yes, if shares that you own are on loan and a dividend is paid, you may receive this as a manufactured dividend - that is cash paid by the borrower to you in place of the dividend paid by the company. This will be the same amount.

If you receive a manufactured dividend, it will be marked in your account statement to help when preparing your tax return.

In some circumstances this may be subject to different tax treatment. These circumstances are set out in the Income Tax 2007 legislation (which you can review here) and relate to profits of a trade carried on by the person and the use of double taxation relief.

This is not tax advice and if you think that this might affect you, you should consider consulting with a tax professional.

Can I vote if I participate in share lending?

If your shares are on loan you may not be able to vote.

Over 95% of the shares in the lending pool are not on loan at any given time. You can vote these shares as normal.

If you would like to vote your shares and they are on loan (and if we support voting in that stock), we will make our best efforts to recall your loaned shares to allow you to vote. You can reach out to customer service for help facilitating this.

What if I don’t want to lend my shares anymore?

You can opt out by turning off share lending in the Freetrade app.

You can do this by selecting the option on your profile screen or by contacting customer service directly.

From that point your shares will no longer be included in the lending pool.

We’ll return any borrowed shares within two working days (it takes two days for a trade to settle).

You will stop receiving any lending revenue from the programme once your shares are returned.

Do I benefit from FSCS protection?

Yes.

Freetrade is covered by the Financial Services Compensation Scheme (“FSCS”).

The FSCS may pay compensation to you if we are unable to do so in the event that Freetrade becomes insolvent.

This includes our obligations to you in respect of securities lending, such as not being able to return your shares to you.

There is a £85,000 limit to the amount that the FSCS will pay to an eligible claimant in respect of investment business with us.

You can contact or find out more about the FSCS (including the current limits, amounts covered and eligibility to claim) in the following ways:

● By phone: 020 7741 4100 or 0800 678 1100
● Online: www.fscs.org.uk.

Where can I see historical share lending yields?

You'll receive details of the income that you received for the shares on loan on your monthly statements.

The chart below shows the distribution of annual share lending yields, by stock, for every year from 2018 to 2023.

The chart shows that most shares do not provide high yields when they are lent out. With most yielding between 0% and 0.5% in any given year.

Each stock is included on the chart below for each of the five years in the time frame.

chart
Past performance is not a reliable indicator of future performance.
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