flatexDEGIRO, a German retail broker offering services across Europe, has launched stock lending services for its customers through its latest partnership with Sharegain.
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Stock Lending Is Getting Popular
Stock lending, or securities lending, is the temporary transfer of shares to a borrower—usually a hedge fund or market-maker—against collateral and a fee. It enables short selling and liquidity provision while giving long holders a way to earn incremental income, but it introduces counterparty, operational, tax, and governance trade-offs.
Last year, flatexDEGIRO revealed that the number of accounts on its platform reached 3 million, triple the figure in 2020. All these customers will now have the option to lend the stocks in their portfolios.
The company holds assets under custody of about €70 billion and, on average, processes more than 60 million securities transactions per year for its customers.
“Securities lending is more than a valuable addition; it’s a smart way for investors to earn extra income,” said Oliver Behrens, CEO of flatexDEGIRO. “Through our partnership with Sharegain, we can roll out this solution to millions of customers across Europe in a fair and transparent way.”
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Benefits Outweigh the Risks?
The benefits are straightforward: lenders collect lending fees that can modestly improve returns, markets gain depth and tighter spreads, and price discovery becomes more efficient.
However, it exposes lenders to counterparty risk (if a borrower or intermediary fails), collateral reinvestment risk, and the loss of voting rights and timely corporate action influence while shares are on loan. Dividends may also be replaced by “payments in lieu,” which can have less favourable tax treatment.
The risks also attracted the attention of regulators towards the service.
Well-known brokers that have launched or expanded fully paid lending programmes include Fidelity, Charles Schwab, Interactive Brokers, E*TRADE, eToro, Robinhood (including a 2024 UK rollout), and Vanguard’s newly formalised programme for qualified accounts.
Among CFD-focused platforms, Swissquote, Saxo Bank, Trading 212, and CMC Markets’ Invest arm also offer stock lending on real shareholdings (typically excluding CFDs and fractional shares).
“Our global solution is designed to support various structures and regulatory frameworks, making it seamless to launch and scale across borders, enabling flatexDEGIRO and its clients to benefit from opportunities once reserved for a select few,” said Boaz Yaari, CEO of Sharegain.
