Customers who enable stock lending give Robinhood permission to lend out any fully paid stocks in their portfolio and will be paid when matched with a borrower. The brokerage has a dashboard to opt into the program and track earnings.
“Robinhood does the work of finding borrowers and managing transactions while customers can add a potential source of passive recurring income to their portfolio," said Steve Quirk, Robinhood’s chief brokerage officer.
To be eligible, customers must have an account valued at $5,000 or more, $25,000 in income and some trading experience. The program will be fully rolled out by the end of May, the firm said.
The securities lending business has been on an upswing. Global securities lenders had $828 million in revenue last month, a 20% increase from April 2021, according to research firm DataLend.
Robinhood competes in a crowded market with many established players focused on the same customers. Other brokerages, including Fidelity Investments, Charles Schwab, T.D. Ameritrade and Webull, also offer securities lending to individual investors.
Robinhood has been bleeding active investors, and revenue slid 43% in the first quarter, the fifth consecutive quarterly drop. Last week, the brokerage said it was laying off 9% of its workforce.
The firm has been focusing on introducing new products—including crypto wallets and automatic investment services—to diversify its revenue streams and recruit new investors
The brokerage rose to new heights during the early days of the Covid-19 pandemic as individual investors flooded the rising market, making a name for itself with a slick interface and zero-fee trades.
It sends customer orders to high-speed trading firms in exchange for cash in a practice called payment for order flow. Fewer investors trading less meant that Robinhood’s transaction-based revenue halved in the first quarter.
This story has been published from a wire agency feed without modifications to the text
