The Stock Yield Enhancement Program allows Futu to borrow shares from any account under your User ID and lend them to counterparties who wish to engage in short selling and are willing to pay interest on the borrowed stocks. Interest will be credited to your account every day when the stock is lent out.
Note: Futu Securities will automatically borrow the shares based on market demand from your account and will not notify you in advance.
Your US account or universal account -securities is ineligible for securities lending if it meets any of the following conditions:
1. It is an ESOP dedicated account.
2. All accounts of U.S. tax resident client.
3. All accounts of intermediary who holds client assets on behalf of others.
Currently, only US shares in the account can be lent.
Eligible securities that can be lent are: US common stocks (listed on the exchanges, PINK and OTCBB), ETF, preferred stocks and corporate bonds).
Those who are not eligible are: municipal bonds and non-US securities.
The interest that customers can earn on stock lending depends on the interest rate in the over-the-counter securities lending market, which may vary greatly depending on the type of securities and the date of borrowing.
The SBL (Stock Borrowing and Lending) service provider provides the interest rate for the Stock Yield Enhancement Program. The provider receives 30-40% of the interest income, while the remaining amount is shared equally between Futu and the client.
Example: The closing price of a stock is $100 per share. If you lend 3,600 shares of this stock at an annualized interest rate of 10% in the lending market. Futu borrows this stock and then lends it to Futu's counterparty. If the counterparty has 40% of the total interest income, the interest is calculated: Futu receives a daily interest of $100 * 3,600 * 10% * 60% / 360, which equals $60. You will receive 50% of this interest amount, which is $30.
The direct counterparty to which you lend shares is Futu Securities, who may lend them to anyone (not limited to FUTU clients) after borrowing from you
If the relevant contents of the Stock Yield Enhancement Program in the help Center are updated, Futu Securities will not notify you separately, and Futu Securities will not be responsible for any form of loss that may be caused.