Japanese online stock brokerage, Monex, Inc. announced on Monday that it will enable stock-lending services on its margin trading accounts, effective from November 6.
Stock-lending services will allow Monex’s margin trading account holders to earn interest using the margin trading collateral stocks. The brokerage customers will lend their stock holdings to the brokerage that will pay appropriate interest rates.
“Customers with margin trading accounts will now be able to use their owned shares as substitute securities for margin trades and receive stock-lending interest rates,” Monex explained. “Substitute securities used for stock lending will be assessed in the same manner as if they were not being loaned out, thereby not affecting maintenance rates.”
Usually, the brokerage will pay an annual interest of 0.1 percent. However, for some stocks, the interest rate can go as high as 10 percent and is continuously working to add bonus interest stocks to this list.
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The brokerage highlighted that the traders can easily sell the loaned shares without any special procedures.
This enhancement in services came as the brokerage was receiving ‘numerous requests’ to allow stock-lending services for margin trading clients.
Enhancing Services to Traders
Monex first offered stock-lending services in January 2003 and has enhanced its offerings since.
The Monex Group subsidiary pointed out that only a few in the Japanese trading market, including Matsui Securities and Rakuten Securities, offer stock-lending services, while Kabu.com Securities partially offers this service.
To receive the stock-lending benefits, Monex customers need to forfeit the other share-holding benefits. However, the brokerage is developing a service enhancement to automatically offer shareholder benefits to the continuous holders of any shares.