Robinhood to introduce new lending feature

The feature is currently being rolled out and will be available to all customers by the end of May 2022.The new lending feature is an attempt by the company to diversify its revenue streams, as it will take a cut of the fees from each loan.

The company already makes money by lending out shares to customers who buy them ‘on margin’, and this new stock lending program is expected to bring in one-to-two times the revenue of the existing margin lending offering.

Customers won’t have to carry any minimum balance in their account to participate, which tends to be the norm at other exchanges that allow them to lend out their shares. As long as the shares have been fully paid for by the customer, Robinhood says it will match customers with interested borrowers to take the loans and that customers will get paid once their shares are successfully placed. Typically, the company explains, borrowers are financial institutions seeking to cover deficits, short sales, or failed deliveries.

Customers will be able to track the loans they’ve made and turn the ‘Stock Lending’ feature on and off at their discretion. They will be able to sell shares they have loaned out.