Robinhood Launches Stock Lending Program in the U.K. to Help Investors Earn Passive Income

Robinhood introduces a new stock lending feature in the U.K., enabling retail investors to earn passive income by lending out their stocks, marking another step in its international expansion.

Key Points

• Robinhood has launched a stock lending program in the U.K., allowing retail investors to earn passive income by lending out their owned stocks.
• The program lets investors “rent” out their stocks to financial institutions, earning monthly fees while retaining ownership and the ability to sell shares.
• The feature is part of Robinhood’s broader strategy to expand its market share abroad, following its U.K. launch last November.
• Investors can still earn dividends on lent stocks and withdraw proceeds from sales at any time.
• Stock lending offers a way for U.K. investors to enhance their investment returns with minimal effort.

Robinhood, the popular online brokerage platform, has unveiled a new stock lending program in the U.K., giving retail investors an opportunity to earn passive income from the stocks they own. The launch on Wednesday marks another significant step in Robinhood’s strategy to expand its presence in international markets, following its successful entry into the U.K. last November.

The new feature allows Robinhood users in the U.K. to lend out stocks they fully own in their portfolio to interested borrowers, such as financial institutions. This process is akin to “renting” out stocks, where the lender earns a monthly fee while retaining ownership of the shares. Institutions typically borrow stocks for various trading activities, including settlements, short selling, and hedging risks.

Robinhood explained that shares lent out through its platform are treated as collateral. The company receives interest from the borrowers and then pays it out monthly to the lenders. Additionally, customers can still receive cash owed from company dividend payments, typically sourced from the party borrowing the stock rather than the company issuing the dividend.

One of the attractive features of Robinhood’s stock lending program is that investors retain the flexibility to sell their lent stocks at any time, with proceeds from sales available once trades settle. However, it is important to note that stocks lent out via Robinhood’s platform may not always be matched with an individual borrower.

“Stock Lending is another innovative way for our customers in the U.K. to put their investments to work and earn passive income,” said Jordan Sinclair, President of Robinhood U.K., in a statement on Wednesday.

This new offering underscores Robinhood’s commitment to providing its users with diverse opportunities to maximize their investment returns. By enabling retail investors to earn extra income with minimal effort, Robinhood is likely to attract more users in the U.K. as it continues to grow its market share abroad.

For investors looking to enhance their portfolio returns, stock lending represents a low-maintenance way to generate additional income, aligning with Robinhood’s mission of democratizing finance for all.