To participate in the FPSL program, you must have a completed financial profile and agree to the terms of the program at opt-in. Once enrolled, Betterment Securities’ clearing partner, Apex, evaluates demand in the lending market. If there is sufficient demand, your eligible shares may be loaned out to Apex, which then lends to other institutional borrowers. Borrowers pay a market-driven lending fee, and Betterment Securities shares a portion of this income with you.
Clients access the FPSL Program through its omnibus accounts with Apex, which means Apex will borrow securities directly from clients through the omnibus account, and Betterment Securities will allocate loaned securities among its clients. Depending on the market demand for loaned securities, some customer securities may be loaned out while others are not. Betterment Securities’ lending allocation is designed to lend securities when it estimates a customer’s earnings will exceed their incremental tax costs, as determined based on a customer’s self-reported financial profile information.
Following the end of each month, Betterment Securities will receive loan fees from Apex for all loaned securities and will allocate the loan fees among clients with loaned securities during the period.
Apex pledges cash collateral of at least 100% of the market value of the securities loaned out to customers and will compare to market value and re-calculate daily, as needed to make sure the correct amount of collateral is posted. Collateral is held in a collateral account at JP Morgan Chase Bank, NA and is administered by Wilmington Trust, National Association, as trustee.
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