Earn income on the international stocks you already own if your stocks are lent out.
About the program
The International Stock Lending Program gives you the opportunity to earn income on international stocks you already own if your stocks are lent out. Once you’ve opted in, our globally recognised partner BNP Paribas SA, is provided consent to lend out your stocks to borrowers on a supply and demand basis.
Why participate?
Earn passive income
Get monthly payments equal to 50% of the Stock Lending loan rate received by CMC Invest if your stocks are lent out*.
Effortless transfer process
The entire process runs seamlessly in the background, and you will maintain full access to platform features, providing a hassle-free experience as your stocks are lent. You will still receive dividends and income distributions and a smooth recall process allows you to buy and sell as usual.
Other considerations
Your stocks will be transferred to an account in the name of CMC Markets Stockbroking Limited and then to BNP Paribas SA, so that BNP Paribas SA can lend your securities to its market counterparties. It is not guaranteed that your stock will always be lent out as stock lending is dependant on market conditions.
*BNP Paribas SA retains 25% of the lending fee paid by the ultimate borrower to facilitate the arrangement.
Eligibility criteria
Eligibility
To participate in the International Stock Lending Program, you or your entity must qualify as a Wholesale Investor. The CMC Invest International Stock Lending Program is available to the following account types: individual, joint, company, trust, and SMSF’s with a corporate trustee, for those that satisfy the wealth test criteria, either:
net assets of at least $2.5 million; or
gross income of at least $250,000 per year for the last two financial years.
How much could I earn?
The Securities Lending Yield Rate is primarily driven by supply and demand dynamics. While most stocks will generally have an annualised yield of under 0.5%, certain stocks can be classified as "Specials" due to unusually high borrowing demand. These "Specials" can command significantly higher yields, often influenced by short-selling or limited stock availability. However, this elevated demand is typically short-term, lasting from a few days to several months, rather than an entire year.
The table below provides an example of potential ownings you would receive if you own 3,000 shares of XYZ Limited, trading at USD $150 per share, (total value of USD $450,000) and BNP Paribas SA offers CMC Invest a 10% annualised yield to lend your shares, after deducting their fee:
| Potential Earnings | ||
Duration | 7 days | 30 days | 90 days |
Yield | 0.19%* | 0.83%* | 2.50%* |
Potential Gross Earnings | USD $875.00 | USD $3,750.00 | USD $11,250.00 |
Earnings Share 50% split with CMC | USD $437.50 | USD $1,875.00 | USD $5,625.00 |
Conversion to AUD at an exchange rate of 1.5 | AUD $656.25 | AUD $2,812.50 | AUD $8,437.50 |
*Calculations are rounded to two decimal places
Considerations:
Daily variability: The yield may fluctuate daily based on the stock price and FX rate at the end of month.
Lending duration: There might not be sufficient demand for your securities to be lent every day.
Yield fluctuations: The yield rate may vary with changes in demand.
Risks of becoming a Wholesale Investor
You must evaluate investment opportunities independently.
You will no longer be provided Retail disclosure documents like a Prospectus, Financial Services Guide or Product Disclosure Statement (PDS).
Wholesale investors are afforded fewer regulatory protections.
Please note that you will only be classified as a wholesale customer for those wholesale services you agree to receive. Any existing or future services provided to you as a retail customer will continue to be provided to you as a retail customer, and you will be afforded retail regulatory protections for those retail services.
Risks of the Stock Lending Program
Description: To protect customers, 105% cash collateral is set aside, in the circumstance that the borrower (BNP Paribas SA) defaults.
If the borrower defaults, you will be paid back from this collateral.
There is a chance that this collateral may not be sufficient to cover entirely the value of the securities lent. This will occur in certain situations including the following:
The borrower (BNP Paribas SA) defaults on its obligations; and
Concurrently, the market value of the securities lent, is greater than the amount of collateral deposited by the borrower, on the same day as the borrower defaults.
The borrower can default in situations including but not limited to:
The Borrower becoming insolvent, and:
does not deposit sufficient collateral to cover the positions lent; and/or
Securities lent are not transferred back to you when you opt-out of securities lending.
Risk mitigation: 105% cash collateral is received for any stock lent. The value of cash collateral is adjusted on a daily basis
Thorough borrower assessments are conducted to evaluate BNP Paribas SA’s financial stability and operational capabilities.
CMC will monitor the security and stability of BNP Paribas SA. BNP Paribas SA ratings can be viewed here: https://invest.bnpparibas/en/debt-and-ratings
Daily monitoring of borrower financial conditions.
Ongoing assessments on market trends and the value of assets lent.
Daily monitoring of the cash collateral the Borrower provides to ensure it is sufficient (105% of market value).
Likelihood assessment: Extremely remote
You should be aware that a common reason for borrowing securities is due to short-selling. Short-selling may put downward pressure on the loaned securities, which may affect the value of your position.
How to opt in for the Stock Lending Program
For individual accounts
Log in to your web trading platform, navigate to Settings > Trading Settings > Stock Lending settings then click > Add accounts
Once the pop up appears, select your individual account and click ‘Save’ to proceed to the ‘CMC Invest Wholesale Investor Classification’ page
Submit your valid accountant certificate form, indicating whether you would like CMC Invest to contact your accountant directly by email and manage the form’s completion and submission on your behalf, then opt into Stock Lending by accepting the relevant terms and risk disclosures.
To know more about the CMC Invest International Stock Lending Program, please contact the Wholesale Investor team on 1300 678 125 or email wholesaleinvestor@cmcmarkets.com.
International Stock Lending Program
Frequently asked questions
Who is eligible to participate in the International Stock Lending Program?
To participate in the International Stock Lending Program, you or your entity must meet the wealth test qualifications as a Wholesale Investor. This involves satisfying one of the following test criteria:
net assets of at least $2.5 million;
or gross income of at least $250,000 per year for the last two financial years.
The CMC International Stock Lending Program is available for individual, joint, company, trust, and SMSF’s with a corporate trustee.
Why do financial institutions want to borrow my stocks?
Financial institutions and market participants borrow stocks to facilitate trade settlements and short selling. Consequently, stocks with limited market availability and high demand “Specials” are more likely to being borrowed.
Can I choose which stocks to lend out?
Stock Lending applies to all eligible stocks in your account. You cannot select which stocks to lend. Market demand determines if a stock is borrowed. This means some of your eligible stocks may be lent out while others may not, based on current borrower interest.
Are there any fees for participating in the International Stock Lending program?
No. There are no fees associated with the Stock Lending Program.
Note that BNP Paribas SA takes 25% of the stock lending fee payable by the ultimate borrower of your stock and CMC Invest will take 50% of the remaining fee on-paid by BNP Paribas SA.
Does it affect my ability to trade my stocks?
No, you can still trade your loaned stocks. You can buy or sell as usual, in accordance with your original agreement. All dividends will be processed in the same way as they would be if the stocks were not being lent out.
When do I start receiving passive income from Stock Lending?
You will not start earning money when you opt into the Stock Lending Program, but rather when BNP Paribas SA lend out your stock. You will receive a Stock Loan confirmation when this happens. Look out for the confirmation in the web platform under Account > Statements > Stock Lending Statements.
How do I get paid through Stock Lending?
Once BNP Paribas SA lend out your stock, your earnings will be paid to your linked cash account monthly in arrears.
To see how much money is deposited into your account at the end of each month, check the Stock Lending Statements in the web platform under Account > Statements > Stock Lending Statements.
Who is BNP Paribas SA?
BNP Paribas SA has been CMC Invest’s International Shares custodian since 2018. As a leading European bank, they hold a significant global presence in 65 countries, with more than 190,000 employees. They operate in three major operating divisions:
Commercial, Personal Banking & Services for all the Group’s retail banking networks and several specialised businesses, including BNP Paribas SA Personal Finance and Arval;
Investment & Protection Services for savings, investment and protection solutions; and
Corporate & Institutional Banking, which is focused on corporate and institutional clients.
Is there a guarantee that my stocks will be loaned out?
No. Having eligible stocks doesn't guarantee they will be lent out.
Usually, stocks with high demand “Specials” and low market availability are more likely to be borrowed.
Are there tax implications?
Our International Stock Lending model has been reviewed to ensure compliance with relevant tax laws and regulations. For example, stock loans will be capped with a 350-day limit to ensure the loan does not impact the ability to qualify for 50% CGT discounts applicable to holding assets for at least 12-months. It's important to note that this only applies to certain account structures, and we recommend that you seek independent personal tax advice.
What are the risks?
CMC Invest has partnered with BNP Paribas SA, one of the largest global custodial banks, to offer Stock Lending services with transparency. BNP Paribas SA carries out risk assessment controls to protect your stocks in line with market peers.
While our International Stock Lending Program is advanced and managed with an efficient risk framework, it's important to be aware of some generic risks involved, including the following:
Description: To protect customers, 105% cash collateral is set aside, in the circumstance that the borrower (BNP Paribas SA) defaults.
If the borrower defaults, you will be paid back from this collateral.
There is a chance that this collateral may not be sufficient to cover entirely the value of the securities lent. This will occur in certain situations including the following:
The borrower (BNP Paribas SA) defaults on its obligations; and
Concurrently, the market value of the securities lent, is greater than the amount of collateral deposited by the borrower, on the same day as the borrower defaults.
The borrower can default in situations including but not limited to:
The Borrower becoming insolvent, and:
does not deposit sufficient collateral to cover the positions lent; and/or
Securities lent are not transferred back to you when you opt-out of securities lending.
Risk mitigation: 105% cash collateral is received for any stock lent. The value of cash collateral is adjusted on a daily basis
Thorough borrower assessments are conducted to evaluate BNP Paribas SA’s financial stability and operational capabilities.
CMC will monitor the security and stability of BNP Paribas SA. BNP Paribas SA ratings can be viewed here: https://invest.bnpparibas/en/debt-and-ratings
- Daily monitoring of borrower financial conditions.
ongoing assessments on market trends and the value of assets lent.
daily monitoring of the cash collateral the Borrower provides to ensure it is sufficient (105% of market value).
Likelihood assessment: Extremely remote
To manage these risks, CMC Invest employs rigorous risk management practices and adheres to regulatory guidelines. Our partnership with BNP Paribas SA ensures strong risk assessment controls and transparency throughout the stock lending process. Please read more about the CMC Invest International Stock Lending Terms and Conditions.
You should be aware that a common reason for borrowing securities is due to short-selling. Short-selling may put downward pressure on the loaned securities, which may affect the value of your position.
How are loaned stocks protected?
We only accept cash collateral in USD or EUR, and throughout the loan, we require a 105% collateral level. This means that the value of the collateral is maintained at 105% of the value of the lent securities, providing an additional buffer against market fluctuations. Additionally, we monitor BNP Paribas SA's creditworthiness on an ongoing basis. Our risk management team makes daily collateral adjustments to maintain this value in relation to the lent securities. These risk mitigation measures are designed to minimise potential losses and enhance the security of your investments.
How do I opt out of Stock Lending?
If you no longer wish to have your international stocks loaned out, you can easily opt out of the International Stock Lending Program in your ‘Trading Settings’. Simply log in to your web platform > Settings (gear) > Trading Settings > Stock Lending > Opt out.
What happens if I want to opt in again to the International Stock Lending Program?
You can choose to opt in or out of the International Stock Lending Program as frequently as you'd like. Please be aware that it takes 2 business days to process your request. If you decide to opt in after previously opting out, you can do so by accessing Settings (gear icon) > Trading Settings > Stock Lending > Add Accounts.
How do I add an individual account?
You can add an individual account by accessing Settings (gear icon) > Trading Settings > Stock Lending > Add Accounts.
How do I add a non-individual account?
You can add a non-individual account by completing the Wholesale Investor Application Form and Qualified Accountant’s Certificate, then email the completed forms with wet ink signatures to wholesaleinvestor@cmcmarkets.com.
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