From CNBC: 2024-09-04 03:58:15

Robinhood launches share lending program in the U.K., allowing consumers to earn passive income by lending out stocks. This feature gives retail investors the opportunity to generate monthly fees by temporarily loaning out their shares. Robinhood keeps cash collateral in a trust account with JP Morgan Chase & co acting as custodian.

Stock lending programs are rare in the U.K., with companies like BlackRock and Freetrade offering similar services. Robinhood passes on 15% of interest to lenders, lower than other firms. Despite the risk, Robinhood aims to protect customers by holding cash equal to the value of loaned stocks in a third-party bank.

The product offering is a test for Robinhood to gauge U.K. regulators’ acceptance of new innovations. Financial regulators require firms to provide adequate information to clients about investment products. This move also helps Robinhood build its presence in the U.K. market, its major international market outside of the U.S.

Hargreaves Lansdown faced difficulties recently, leading to acquisition by a consortium. Unlike Robinhood, Hargreaves Lansdown charges various fees for buying and selling shares. The stock lending program reflects Robinhood’s strategy to expand internationally and stay competitive in the changing financial landscape.

Read more: Robinhood launches stock lending product in the UK