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.
Once you're opted in, Betterment Securities’ clearing partner Apex evaluates demand in the lending market. If there's sufficient demand, your eligible shares may be loaned to Apex, which then lends them to institutional borrowers. Borrowers pay a market-driven lending fee, and Betterment shares a portion of that income with you.
Lending happens from clients through the omnibus account structure, meaning Apex borrows securities and Betterment Securities allocates loaned shares among clients. Depending on market demand, some shares may be loaned while others are not. Betterment Securities’ allocation is designed to loan your securities when it estimates your earnings will exceed their incremental tax costs, based on your self-reported financial profile.
At the end of each month, Betterment Securities receives loan fees from Apex and distributes them to clients whose shares were loaned during that period.
Your loaned shares are fully secured. Borrowers must pledge cash collateral equal to at least 100% of the market value of your loaned shares. This collateral is marked to market daily and held in a custody account at JP Morgan Chase Bank, NA, administered by Wilmington Trust, National Association, as trustee.