Freetrade to introduce securities lending

adindas

mattywallace121 said:

Happy for them to do it to keep the fees low. 

Everyone wants an all singing all dancing service for free these days.

People do not even notice it whether they loan out your shares or not.

mattywallace121

They do notice it when it’s brought to their attention through a change in conditions effectively saying accept the changes or you won’t be able to trade using the GIA.

Could have been slightly better handled by them. A lot of investors on there are 1st time investors and don’t understand the concept.

adindas

mattywallace121 said:

They do notice it when it’s brought to their attention through a change in conditions effectively saying accept the changes or you won’t be able to trade using the GIA.

Could have been slightly better handled by them. A lot of investors on there are 1st time investors and don’t understand the concept.

Certainly through change of T&C.

But what I mean here is that  in term of shares and value of their money, it will not impact them at all.  The value of their shares and investment will remain the same and thus unnoticable.

DireEmblem

Deleted_User said:

adindas said:

But what I mean here is that  in term of shares and value of their money, it will not impact them at all.  The value of their shares and investment will remain the same and thus unnoticable.

Correction: it won't be noticeable unless it all goes horribly wrong.

That's the whole point that stock lending to improve liquidity in the market, assist with buying additional shares to 'vote' or 'short' should if operated within the regulations of the market, be collateralised.  The collateral needs to be in place in exchange for the shares to be lent out.

IanManc

Deleted_User said:

adindas said:

Deleted_User said:

adindas said:

Deleted_User said:

Vanguard's terms clearly say they don't reserve the right to do this. See https://www.vanguardinvestor.co.uk/content/documents/legal/terms-conditions.pdf under 2.2, where it says Vanguard Funds (which have been defined to include Vanguard ETFs) are held "as client assets".

I think this one is more clear.

https://investor.vanguard.com/client-benefits/margin-disclosure-statement

That's not clearer, it's about something completely different: buying securities on margin. Investors who buy on margin do run the risk that their positions will be liquidated without their say-so. This is irrelevant to investors who pay for the securities they buy in full up front, as most of us do; it doesn't say they can lend out your securities in that situation. It is also from Vanguard's US website, and I don't know if they even offer margin accounts to UK investors.

I read somewhere from Vanguard UK investor but still need to find it.. But this was the news.

https://www.investorschronicle.co.uk/2017/01/12/funds-and-etfs/etfs/vanguard-starts-securities-lending-7HJYOLEZz4Y1IwpHuSMHUI/article.html

Vanguard starts securities lending
16 London-listed Vanguard ETFs will start to boost their income via securities lending

That is about something different, too. It is about Vanguard-managed funds/ETFs lending out the securities they hold (something which applies regardless of which broker/platform you hold Vanguard funds/ETFs with). It is not about Vanguard lending out your securities when you hold them on their platform. They don't do the latter, because of the terms I referred to above.

Securities lending by a fund/ETF and by a platform/broker are different things. The former is a widespread practice. The latter is not common in the UK, except for the so-called "free" brokers.

E.g. Vanguard's terms clearly say they don't reserve the right to do this. See https://www.vanguardinvestor.co.uk/content/documents/legal/terms-conditions.pdf under 2.2, where it says Vanguard Funds (which have been defined to include Vanguard ETFs) are held "as client assets".

I am referring to security lending in general. Whether it is margin account or not as the statement is about security lending. And where do you think they get all of the shares they loan to other parties do you think they need to buy all of them before lending it ?? To me it does not make sense where they could easily loan out their client shares.

Your previous link only say "as client assets".

When you buy share not on margin, it must be your assets as you already bought with your own money (not borrowing); so no clarification is needed.

But your link still not clear, as it does not particularly say they can not lend out your shares (assets) to third party. We need to find out a paragraph particularly saying " they can not (or will not) lend your shares" to be 100% sure.

I remember read somewhere they did loan out your asset although not common as their platform are mainly for long term investing.

I guess I should have quoted more of 2.2 (in Vanguard's terms). It also says:

2.2.2. All investments held within your Account will be registered:
2.2.2.1. for a Pension Account, in the name of our Trustee; and
2.2.2.2. for an ISA or General Account, in the name of our Nominee.

Since investments are to be held in the name of Vanguard's Trustee or Nominee, they can't be lent out, because if they were lent out, they would no longer be in the name of Vanguard's Trustee or Nominee. If Vanguard had wanted to say that investments would be held in the name of their Trustee or Nominee except when they are being lent out, then they would need to say that somewhere in this T&Cs document. But they don't say it, so they aren't giving themselves permission to lend out their customers' investments. They don't have to specify every different thing they can't do with customers' investments (e.g. lend them out, swap them for magic beans, donate them to a terrorist sleeper cell, and so on, and so forth) because they've specified what they will do with them, viz. hold them in the name of their own Trustee or Nominee, and they therefore can't do anything with the investments that is incompatible with their continuing to be held in the name of the Trustee or Nominee.

Your vague memory of something you once read is a less reliable guide than the actual T&Cs of Vanguard's platform, which we have available a link away.

It may not make sense to you that Vanguard wouldn't want to lend out their clients' investments, but that is irrelevant when they haven't given themselves permission to do that in the terms which they have written.

(I don't know why you keep mentioning margin accounts, which are irrelevant in multiple ways.)

Details of Vanguard's securities lending activities are given in the annual reports for the various ranges of funds, e.g. the Vanguard UK Domiciled Investment Funds report, from page 298 onwards, and page 309 onwards:

Annual Report - UK Domiciled UCITS (vanguardinvestor.co.uk)

GeoffTF

IanManc said:

Deleted_User said:

adindas said:

Deleted_User said:

adindas said:

Deleted_User said:

Vanguard's terms clearly say they don't reserve the right to do this. See https://www.vanguardinvestor.co.uk/content/documents/legal/terms-conditions.pdf under 2.2, where it says Vanguard Funds (which have been defined to include Vanguard ETFs) are held "as client assets".

I think this one is more clear.

https://investor.vanguard.com/client-benefits/margin-disclosure-statement

That's not clearer, it's about something completely different: buying securities on margin. Investors who buy on margin do run the risk that their positions will be liquidated without their say-so. This is irrelevant to investors who pay for the securities they buy in full up front, as most of us do; it doesn't say they can lend out your securities in that situation. It is also from Vanguard's US website, and I don't know if they even offer margin accounts to UK investors.

I read somewhere from Vanguard UK investor but still need to find it.. But this was the news.

https://www.investorschronicle.co.uk/2017/01/12/funds-and-etfs/etfs/vanguard-starts-securities-lending-7HJYOLEZz4Y1IwpHuSMHUI/article.html

Vanguard starts securities lending
16 London-listed Vanguard ETFs will start to boost their income via securities lending

That is about something different, too. It is about Vanguard-managed funds/ETFs lending out the securities they hold (something which applies regardless of which broker/platform you hold Vanguard funds/ETFs with). It is not about Vanguard lending out your securities when you hold them on their platform. They don't do the latter, because of the terms I referred to above.

Securities lending by a fund/ETF and by a platform/broker are different things. The former is a widespread practice. The latter is not common in the UK, except for the so-called "free" brokers.

E.g. Vanguard's terms clearly say they don't reserve the right to do this. See https://www.vanguardinvestor.co.uk/content/documents/legal/terms-conditions.pdf under 2.2, where it says Vanguard Funds (which have been defined to include Vanguard ETFs) are held "as client assets".

I am referring to security lending in general. Whether it is margin account or not as the statement is about security lending. And where do you think they get all of the shares they loan to other parties do you think they need to buy all of them before lending it ?? To me it does not make sense where they could easily loan out their client shares.

Your previous link only say "as client assets".

When you buy share not on margin, it must be your assets as you already bought with your own money (not borrowing); so no clarification is needed.

But your link still not clear, as it does not particularly say they can not lend out your shares (assets) to third party. We need to find out a paragraph particularly saying " they can not (or will not) lend your shares" to be 100% sure.

I remember read somewhere they did loan out your asset although not common as their platform are mainly for long term investing.

I guess I should have quoted more of 2.2 (in Vanguard's terms). It also says:

2.2.2. All investments held within your Account will be registered:
2.2.2.1. for a Pension Account, in the name of our Trustee; and
2.2.2.2. for an ISA or General Account, in the name of our Nominee.

Since investments are to be held in the name of Vanguard's Trustee or Nominee, they can't be lent out, because if they were lent out, they would no longer be in the name of Vanguard's Trustee or Nominee. If Vanguard had wanted to say that investments would be held in the name of their Trustee or Nominee except when they are being lent out, then they would need to say that somewhere in this T&Cs document. But they don't say it, so they aren't giving themselves permission to lend out their customers' investments. They don't have to specify every different thing they can't do with customers' investments (e.g. lend them out, swap them for magic beans, donate them to a terrorist sleeper cell, and so on, and so forth) because they've specified what they will do with them, viz. hold them in the name of their own Trustee or Nominee, and they therefore can't do anything with the investments that is incompatible with their continuing to be held in the name of the Trustee or Nominee.

Your vague memory of something you once read is a less reliable guide than the actual T&Cs of Vanguard's platform, which we have available a link away.

It may not make sense to you that Vanguard wouldn't want to lend out their clients' investments, but that is irrelevant when they haven't given themselves permission to do that in the terms which they have written.

(I don't know why you keep mentioning margin accounts, which are irrelevant in multiple ways.)

Details of Vanguard's securities lending activities are given in the annual reports for the various ranges of funds, e.g. the Vanguard UK Domiciled Investment Funds report, from page 298 onwards, and page 309 onwards:

Annual Report - UK Domiciled UCITS (vanguardinvestor.co.uk)

That is lending securities held by the funds. That is not the same as lending out the entire fund holdings. I have not heard of that being done for holdings of OEICs or Unit Trusts. It is, however, possible to lend out holdings of ETFs. Vanguard has not said that it does that, so it would not be allowed to do it. Provided you consent, Freetrade will be allowed to lend out your ETF holdings in a GIA or SIPP, but not in an ISA.

adindas

Deleted_User said:

adindas said:

Deleted_User said:

adindas said:

Deleted_User said:

Vanguard's terms clearly say they don't reserve the right to do this. See https://www.vanguardinvestor.co.uk/content/documents/legal/terms-conditions.pdf under 2.2, where it says Vanguard Funds (which have been defined to include Vanguard ETFs) are held "as client assets".

I think this one is more clear.

https://investor.vanguard.com/client-benefits/margin-disclosure-statement

That's not clearer, it's about something completely different: buying securities on margin. Investors who buy on margin do run the risk that their positions will be liquidated without their say-so. This is irrelevant to investors who pay for the securities they buy in full up front, as most of us do; it doesn't say they can lend out your securities in that situation. It is also from Vanguard's US website, and I don't know if they even offer margin accounts to UK investors.

I read somewhere from Vanguard UK investor but still need to find it.. But this was the news.

https://www.investorschronicle.co.uk/2017/01/12/funds-and-etfs/etfs/vanguard-starts-securities-lending-7HJYOLEZz4Y1IwpHuSMHUI/article.html

Vanguard starts securities lending
16 London-listed Vanguard ETFs will start to boost their income via securities lending

That is about something different, too. It is about Vanguard-managed funds/ETFs lending out the securities they hold (something which applies regardless of which broker/platform you hold Vanguard funds/ETFs with). It is not about Vanguard lending out your securities when you hold them on their platform. They don't do the latter, because of the terms I referred to above.

Securities lending by a fund/ETF and by a platform/broker are different things. The former is a widespread practice. The latter is not common in the UK, except for the so-called "free" brokers.

E.g. Vanguard's terms clearly say they don't reserve the right to do this. See https://www.vanguardinvestor.co.uk/content/documents/legal/terms-conditions.pdf under 2.2, where it says Vanguard Funds (which have been defined to include Vanguard ETFs) are held "as client assets".

I am referring to security lending in general. Whether it is margin account or not as the statement is about security lending. And where do you think they get all of the shares they loan to other parties do you think they need to buy all of them before lending it ?? To me it does not make sense where they could easily loan out their client shares.

Your previous link only say "as client assets".

When you buy share not on margin, it must be your assets as you already bought with your own money (not borrowing); so no clarification is needed.

But your link still not clear, as it does not particularly say they can not lend out your shares (assets) to third party. We need to find out a paragraph particularly saying " they can not (or will not) lend your shares" to be 100% sure.

I remember read somewhere they did loan out your asset although not common as their platform are mainly for long term investing.

I guess I should have quoted more of 2.2 (in Vanguard's terms). It also says:

2.2.2. All investments held within your Account will be registered:
2.2.2.1. for a Pension Account, in the name of our Trustee; and
2.2.2.2. for an ISA or General Account, in the name of our Nominee.

Since investments are to be held in the name of Vanguard's Trustee or Nominee, they can't be lent out, because if they were lent out, they would no longer be in the name of Vanguard's Trustee or Nominee. If Vanguard had wanted to say that investments would be held in the name of their Trustee or Nominee except when they are being lent out, then they would need to say that somewhere in this T&Cs document. But they don't say it, so they aren't giving themselves permission to lend out their customers' investments. They don't have to specify every different thing they can't do with customers' investments (e.g. lend them out, swap them for magic beans, donate them to a terrorist sleeper cell, and so on, and so forth) because they've specified what they will do with them, viz. hold them in the name of their own Trustee or Nominee, and they therefore can't do anything with the investments that is incompatible with their continuing to be held in the name of the Trustee or Nominee.

Your vague memory of something you once read is a less reliable guide than the actual T&Cs of Vanguard's platform, which we have available a link away.

It may not make sense to you that Vanguard wouldn't want to lend out their clients' investments, but that is irrelevant when they haven't given themselves permission to do that in the terms which they have written.

(I don't know why you keep mentioning margin accounts, which are irrelevant in multiple ways.)

Please Quote a paragraph spell out that  "they can not (or will not reserve the right) lend your shares" ?? (or the like)

If you just do not notice it, it does not mean they do not or will not reserve the right to do that in the future, unless they specifically spell it out.

Security lending is legal and a regulated activity. It will not impact on your investment. Whether they do or not do security lending your money and the number of shares you own will still be the same. Again differentiate between security lending and Payment for order Flow (PFOF). 

Regarding Free Trade allowing a security lending, if you do not like it what preventing you to move your money to the platforms/Brokers which you "believe" is currently not doing security lending and will not reserve the right to do that in the future?? It is just the same with the people who believe in ethical banking.

As other people have also said, security lending will benefit to the retailer investors/traders as this will drive down the cost of investing/trading.

If they charge you next to nothing and they do not do a security lending you should be more worry about that, as it is just a matter if time before they collapse.

Mind to give the cost comparison of  investing, short term investing /trading for those who do and do not do the security lending (if any or specifically spell out that they do not that and will not do that in the future)) ??

The emerging of the challengers investment apps like eToro, Trading 212, Stake, Lightspeed, InvestEngine, FreeTrade  investment apps in the UK is a game changer as it will allow the retail trader/swing trader to do what is literately very costly to do in the past. No wonder a lot of dynosaurus  investment platforms do not like it as it is a thread for their existence.
Also people fail to recognize (or do not want to recognize) that the GIA (General Investment Account) of many (if not all) of the dynosaurus  investment platforms are not really much of used or less popular as they can not compete. Security lending is allowed in GIA, but not in ISA account anyway. So no wonder they keep banging from this side to confuse people.

IanManc

GeoffTF said:

IanManc said:

That is lending securities held by the funds. That is not the same as lending out the entire fund holdings. I have not heard of that being done for holdings of OEICs or Unit Trusts. It is, however, possible to lend out holdings of ETFs. Vanguard has not said that it does that, so it would not be allowed to do it. Provided you consent, Freetrade will be allowed to lend out your ETF holdings in a GIA or SIPP, but not in an ISA.

No one has said that anyone is "lending out entire fund holdings". That is a straw man argument against something you have made up. 

The lending activities of Vanguard's ETFs are given in their Annual Reports, The "Securities Lending Income" of each ETF is given in its respective "Statement of Operations". 

This link is to the Statement of Operations of VWRL on page 132 of the annual report, and the income of all the other ETFs covered by the report in each ETF's listing:

Annual Report ETF - Europe ETFs - English (vanguardinvestor.co.uk)

And the full list of Securities Lending Income received by the respective Vanguard ETFs is listed on page 651 of the report:

Annual Report ETF - Europe ETFs - English (vanguardinvestor.co.uk)

GeoffTF

IanManc said:

GeoffTF said:

IanManc said:

That is lending securities held by the funds. That is not the same as lending out the entire fund holdings. I have not heard of that being done for holdings of OEICs or Unit Trusts. It is, however, possible to lend out holdings of ETFs. Vanguard has not said that it does that, so it would not be allowed to do it. Provided you consent, Freetrade will be allowed to lend out your ETF holdings in a GIA or SIPP, but not in an ISA.

No one has said that anyone is "lending out entire fund holdings". That is a straw man argument against something you have made up. 

The lending activities of Vanguard's ETFs are given in their Annual Reports, The "Securities Lending Income" of each ETF is given in its respective "Statement of Operations". 

This link is to the Statement of Operations of VWRL on page 132 of the annual report, and the income of all the other ETFs covered by the report in each ETF's listing:

Annual Report ETF - Europe ETFs - English (vanguardinvestor.co.uk)

And the full list of Securities Lending Income received by the respective Vanguard ETFs is listed on page 651 of the report:

Annual Report ETF - Europe ETFs - English (vanguardinvestor.co.uk)

The topic was platforms lending out shares. Freetrade is proposing to do that with their platform, but Vanguard is not proposing to do it. Vanguard's stock lending within funds is not relevant to that topic. If people want to discus stock lending within funds, it would be better to set up a new thread rather than confuse the issue.