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Fully Paid Lending Program

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What's our Fully Paid Lending program?

Our Fully Paid Lending (FPL) program allows you to potentially generate additional income in your portfolio by lending your shares. If you're holding in-demand securities, your securities may be selected to be loaned out. When shares are loaned out, you'll earn income, which will be paid to you monthly.

How does securities lending work?

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After you enroll, Vanguard Brokerage may borrow shares that you hold and lend them to counterparties who are seeking to borrow such shares.

You will receive income from Vanguard Brokerage on any borrowed security. Income accrues daily and is paid monthly.

When your loan is closed, all of your shares will be returned to you.

A sample calculation of FPL income if you are enrolled in the program and loaned out 5,000 shares at a market price of $25.00 a share. The contract market value would be $125,000, with an annualized lending rate of 7.5%. The daily accrual would be $26.04, and the hypothetical monthly income would be $781.20. Lending rate is subject to change and may adjust based on a variety of market factors, value of loaned securities and borrowing demand. Lending rate calculation is $125,000 times 7.5% divided by 360 days. Monthly income calculation is $26.04 times 30 days per month represents 100% of hypothetical monthly loan income.

Who's eligible to participate in Fully Paid Lending?

To participate in Vanguard Brokerage's Fully Paid Lending program, you must have at least $500,000 in assets held at Vanguard and be web-registered. While most Vanguard Brokerage Account registration types are eligible to participate, brokerage accounts enrolled in a Vanguard-affiliated advisory service and margin accounts are not eligible.

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Benefits

You could earn additional income with securities you already hold.
Once you enroll, no additional action is needed by you to participate in this program.

You're safeguarded with cash collateral.
The borrower of your shares must provide collateral that's at least 102% of the daily market value of the securities.

You maintain economic ownership.
You can sell your shares or leave the program at any time. You'll also be able to view loan activity while you're enrolled.

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Key considerations

  • Participation involves certain risks and there is no guarantee your shares will be borrowed or that you'll earn money while enrolled in the program.
  • The duration of any loan can vary.
  • When your shares are on loan, your voting rights will be temporarily transferred to the borrower.
  • Vanguard Marketing Corporation's ("VMC") shares on loan are not covered by SIPC. In the event VMC defaults on its loan obligations, you have the right to the collateral held on your behalf.
  • Borrowed shares can be used to facilitate a short sale, which could influence the price of the security.
  • If your security on loan pays a dividend, you'll receive a substitute payment that could have tax consequences different than dividend payments made on shares held in your account.
  • While your security is on loan, the lending rate will adjust frequently with the lending market, meaning the rate may not be fixed during the loan period.
  • This information isn't a recommendation to participate in Vanguard Brokerage's Fully Paid Lending program.
  • Participation requires eligibility, client-determined appropriateness, and enrollment.
  • Loans are collateralized, but there's a risk of loss if the event of bankruptcy.
  • Vanguard Brokerage maintains an economic interest in Fully Paid Lending program loans and earns revenue in connection with such loans.
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Apply to enroll

If you meet our eligibility requirements and the program is appropriate for you, you can submit your enrollment. Enrollment is completed at the account level, so if you'd like to enroll more than one account, you'll need to complete an application for each account. Once you're enrolled, you can potentially earn additional income on shares that are borrowed.

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Fully Paid Lending Program FAQs

All investing is subject to risk, including the possible loss of the money you invest.

Vanguard Brokerage does not provide advice. Please consult a tax advisor when determining the tax implications of transacting in your account or lending securities.