Etoro announced today (Thursday) the launch of a stock lending programme that allows UK and European users to earn passive income by lending stocks to borrowers. Therefore, Israeli Fintech has followed in the footsteps of competitors in the online retail trading market, including Robinhood, who has been offering similar solutions for some time. 4o
The initiative represents a significant expansion of Etoro’s existing relationship with BNY. This will act as the administrator for the new product. Equileend stock lending platform identifies potential borrowers and drives the lending process.
“Stock lending has traditionally been a protection for large financial institutions, and it has been much more difficult for retail investors to earn passive income in this way,” said Yossi Brandes, VP execution service at Etoro.
“We hope to level the arena by leveraging BNY’s global clearing service to enable millions of Etro users in the UK and Europe to engage in stock lending in an easy and transparent way.”
The program will be first available to high-rise Etoro Club members with Platinum, Platinum+ and Diamond status before being expanded to other users at a later date.
Etoro has recently been in the spotlight for a planned IPO in Nasdaq under the ticker ETOR. The latest market disruption caused by Donald Trump’s tariff announcement has prompted the company to suspend IPO roadshows to “assess the market situation.”
How it works
Users who choose to join must opt-in. The entire portfolio of eligible equity positions will then be considered for lending. Only “real” inventory positions for the entire unit are eligible. CFDs and fractional strains are excluded.
Participating users will receive a monthly statement tracking their income when the stock is successfully lended. Securities with low market liquidity, high volatility and high demand are more likely to borrow and generate higher revenue.
While the shares are being lended, the user temporarily transfers ownership to the borrower and confiscates voting rights. However, they continue to receive dividends and maintain their ability to sell stocks and opt out of the program without putting any costs.
How can Mach make money?
Although not explicitly detailed in the initial announcement, Etoro has provided a formula to the Help Center for calculating potential revenue.
“Participants receive monthly payments, which corresponds to 50% of the net revenue that Etoro acquires and receives from partners for these lending transactions. Actual income from stock lending may vary each month depending on the market demand for the stock,” Etoro explains in the FAQ.
The ultimate value will vary based on which assets are loaned out, the number of shares, and variable lending fees that fluctuate due to market demand and supply.
In the Etoro example, it shows that the mortgage is 1%, the smoothing and maintenance costs are 15%, and Etoro’s revenue share is 50% (don’t forget that these values are not fixed). This example refers to a relatively substantial investment of 2,000 Tesla stocks at a price of $350 each, totaling $700,000. How much does Etro offer for a loan that lasts for 112 days (almost four months) for this amount? It’s over $925.
Is that a lot? Given that the funds are already tied to stocks, it’s certainly a great bonus, an additional “dividend” from owning the stock. However, profits will be quite symbolic for retail investors who usually have a much smaller portfolio.
For comparison, the stock lending program introduced by Swissquote, which has been in operation since 2024, offers an annual interest rate of 5% or more on the most popular stocks selected. However, looking at the offering of Robinhood, which implemented a similar solution in 2022, the terminology is very comparable. The same applies to the Equity Yield Enhancement Program (SYEP) derivatives introduced in 2023 by interactive brokers.
Therefore, it can be concluded in this respect that Etro does not deviate from the market average.
Expanding financial access
Through BNY’s Global Clearing Platform, Etoro users can access 19 exchanges worldwide with integrated solutions for clearing, custody, settlement, execution and financing.
Victor Olafren, head of global clearing at BNY, commented on the expansion, “We are delighted to expand our relationship with Etro and support our overall solution set across clearing, settlement, custody, forex and cash management.” “This development represents the best of BNY’s world-class platforms, Etoro, Equileand, and Heritage and Innovation.”
Etoro offers educational resources on its platform to help users understand the potential income opportunities and risks associated with stock lending.
Dan Dougherty, managing director of global sales and account management at Equileand, said the collaboration “indicators of significant advances in the securities lending market.”
The European Securities Markets Agency (ESMA) issued guidance, noting that securities lending may generate additional returns, but could introduce additional risks such as counterparties and the risk of under-collateralization. The authorities announced several measures in 2023 to curb securities lending to retail investors.
As FinanceMagnates.com This week, Shir Shalom, who led various projects related to Etoro’s risk management, announced his departure from the financial trading platform after nearly four years in various leadership roles. “Etrian forever,” she wrote about her socializing.
