What is it?
Our clearing partner, Apex, facilitates a securities lending program that lends shares to individuals and institutions that are looking to borrow them. Apex provides Gatsby with a portion of the revenue that they receive for lending client securities. All Gatsby clients are enrolled in securities lending by default.
Things to consider
The FPSL program will change the way you receive dividends and impact your voting rights for the shares you own.
If a dividend-paying stock is loaned, you will receive cash-in-lieu of that dividend payment. Cash-in-lieu payments are taxed differently so it is important that you discuss the matter with a licensed tax professional.
You will also forfeit your proxy voting right to the borrower while your securities are out on loan. This is more commonly a concern for larger, institutional investors, but we wanted to make it clear.
Other risks of Securities Lending
- Collateral may be insufficient in the event of borrower’s default;
- Operational risk;
- Tax implications;
- Securities loaned out may not be covered by SIPC;
- Borrower or counterparty risk; and
- When a security is transferred pursuant to a lending agreement, the rights to
- dividends and any other distributions are transferred to the borrower.
Want to learn more or opt out?
Check out the Lending Agreement and important disclosures regarding the program for a full overview and all associated risks. If after reading these documents you have any questions, or would like to un-enroll from the program, please contact firstname.lastname@example.org.