Fully-Paid Securities Lending Program

Will my securities be lent as soon as I enroll in the Program?

Participation in the Program does not guarantee that your securities will be lent. The key factor in determining whether a security will be lent is the availability of the security in the market relative to the demand to borrow that security. Market conditions are therefore among the factors that determine which securities will be lent. Note that you can also exclude certain securities if you don't want them to be lent. To do so, call us at 1-888-902-0202 or write to us via our Secure Messaging Centre.

What will my securities be used for when they are out on loan?

During the course of a typical trading day, brokers lend or borrow securities to and from investors for a variety of purposes. Your loaned securities will mainly be used for financing activities, such as cash management and collateral exchange. They can also be used for purposes such as short selling, hedging strategies or to take advantage of arbitrage opportunities.

How do I know if my securities have been lent and at what rate? 

When securities are lent, you receive a daily report and a monthly report indicating the names of the securities lent, the quantity of securities lent, and the lending income. The same applies when securities are returned or when lending rates change. Please note that you can: 

• Access daily and monthly securities lending reports in the Documents / Reports / Securities Lending menu. 
• Access an overview of the securities lent, the quantity lent, and the income in the Profile section under Accounts / Securities Lending Program / Securities on loan. 
• See when a security is lent, as it remains in the source account and an icon in the Assets section indicates that the security is lent.

How is the loan rate determined?

The loan rate is based on market factors and may vary based on supply and demand for the securities.

What portion of the lending revenue am I entitled to?

When you participate in the Fully-Paid Securities Lending Program, you can earn lending revenue based on the lending value of the securities, prorated to the number of days the securities were lent. The entire amount (100%) of the lending revenue will be paid into your account around the 4th business day of the month. Note that half (50%) of the lending revenue is shared with Natcan Trust Company, as a fee for acting as lending agent, collateral agent and securities intermediary for collateral.

How will these payments be reported on my tax slips?

The total amount of lending revenue received from securities lending must be included in your income tax return. This lending revenue will be reported on your tax slips, the “Investment Income Summary” and the T5 (in Box 14 – Other income from Canadian sources). Please contact a tax specialist to find out how to deduct the amount collected by Natcan Trust Company from your lending revenue and to understand the tax impact of your participation in the Program. Consult the tax guide for regulatory information.

What are the eligibility criteria?

There is no asset minimum. You only need to have an eligible registered or non-registered account. The program is available exclusively to Canadian residents.  

Notable exclusions:

• Estates
• Trusts
• Guarantee/Guarantor
• InvestCube

For more information, please contact our team at 1-888-902-0202.

What types of securities are eligible for the Program?

The Fully-Paid Securities Lending Program is restricted to securities from issuers listed on a Canadian or U.S. stock exchange (including exchange-traded funds (ETFs)). Securities listed on an exchange in Canada that meet at least one of the following criteria can be included in the Program:

• 6-month average volume weighted average price (VWAP) ≥ $2.00
• 6-month average daily trading volume ≥ 100,000 shares
• 6-month average free float market capitalization ≥ $200 million

What if I change my mind after I enroll in the Securities Lending Program?

You may withdraw from the Program at any time by informing us in writing via our secure Message Centre, at least 15 business days before your intended date of withdrawal. Upon receiving your notice, Natcan Trust Company will begin the process of recalling your loaned securities. Remember that you maintain full economic ownership of securities on loan and may sell them or recall the loan at any time.

Am I entitled to dividends on loaned securities?

Yes, you will continue to receive dividends, and they will be paid in cash or reinvested (DRIP) depending on what you choose.

Can I exercise my voting rights?

You will retain all voting rights until your securities are lent. Once your securities are lent, you renounce your voting rights proportionally to the loan and the borrower may exercise them in your place. To exercise your voting rights, you may recall loaned securities in accordance with the Securities Lending Agency Agreement at least 10 business days prior to the applicable record date.

Can I borrow funds from my margin account and still participate in the Program?

No. If you have a debit balance in your margin account, you may not lend securities. We will recall loaned securities until the debit balance is cleared.

What option trades are permitted while my securities are out on loan?

You may trade all permitted options strategies in your account. However, an option position in the source account will trigger a recall of the underlying asset and prevent any future lending until the option expires, or the position is closed. Once the option expires or the position is closed, your securities will again be eligible for the Program and can be lent based on demand.

Enroll in the Fully-Paid Securities Lending Program

If you have a joint account or cannot enroll in the Program online, call us at 1-888-902-0202

Requesting security exclusions or lending ratio modifications

• Contact our team via the Secure Messaging Centre on the NBDB platform or complete the Written Instructions Form. Please allow 3 business days for processing.

Other documentation

• Consult the GMSLA document for information on ISLA's Global Master Securities Lending Agreement.
• Consult the tax guide for regulatory information.

The information set out of this webpage (including any videos) is provided for information purposes only. It in no way replaces the client documentation and does not constitute a recommendation to enroll in the Fully-Paid Securities Lending Program.  

The client must read the client documentation in its entirety (including, but not limited to, the Fully-Paid Securities Lending Package, the FPL Account Request Form, the Securities Lending Agency Agreement and the Global Master Securities Lending Agreement (GMSLA) to obtain the information they need regarding the risks and features of the Fully-Paid Securities Lending Program. 

1. The Canadian Investor Protection Fund (CIPF) does not provide any coverage for Fully-Paid Securities Lending transactions. Your securities will not be protected by the CIPF while on loan since they will not be held in your securities account. Your Fully-Paid Securities Lending account is not considered a "securities account" or a "customer" account within the meaning of CIPF's coverage policy. Instead, Natcan Trust Company will hold 102% high-quality collateral for you while your securities are out on loan. This collateral will be updated daily. 

*($100,000 X 8%) / 365 days = $21.92. The calculation is based on a 365 day calendar year for Canadian securities and 360 days for U.S. securities.