What happens if the borrower defaults and the collateral proves inadequate?
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One question I do have: does this affect our FSCS protection in any way?
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its sneaky as the email literally just says we are making changes not what the changes are you have to dig through a long document and remember the original info.
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if trading 212 is using something that we are buying (the shares) then the purchase price should be reduced or we should share in the benefit of the income generated no matter how small.
Imagine if you buy a Tesla and every time its parked on your drive Elon comes by and takes it for a spin when ever he feels like it.
As a customer if I feel like I am being taken advantage of, No matter how small then it reduces my trust going forward due to the what is coming next. We all want trading 212 to succeed and introducing things like this especially with such limited transparency and No benefit for us the people putting the money up for the shares aint cool.
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Untrue, you just read the amendments summary doc of NEW sections. Takes a few mins to digest if you were already aware securities lending was coming, maybe a bit more time if you didnât but you have a month.
You are benefitting by virtue of a FREE service. Same way Facebook is free because they sell your anonymised data to advertisers to be a viable business, Trading212 will lend out our securities to maintain a sustainable FREE base service for customers.
Thatâs a fair trade.
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Multiple questions on top of my initial question (What happens if the borrower defaults and the collateral proves inadequate?). Shares Lending Risk Disclosure states that âvalue or collateral provided may fall below the cost of replacing the shares that have been lentâ. Does T212 recoup this loss from the Borrower?
22.5 in the T&Câs states âWhere the recall does not take place, you will be entitled to payment from the Borrower equivalent to the dividend you would otherwise have received.â
In the scenario that the Borrower cannot honour this, what happens to my dividend payment? Who pays this?
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I get the point that it might help them out but Iâd rather pay to use the service than have to lend my shares which by the way I donât have an option to opt out.
When you say itâs no detriment to you, for now yes but what happens the borrower defaults? It wonât be the first time this has happened.
[quote=âDylTrader, post:15, topic:10529â]
When
[/quote] Here is the risk acknowledged as well. As far as Iâm concerned, I should have a say in agreeing to anything involving my money thatâs risky and not be forced to accept in order to continue using the platform.
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I have protection of the FSCS with my banks in the UK so Iâm not worried. T212 may not be using a UK which makes it a lot riskier.
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The entity that runs this program IBKR provides cash collateral for the shares to cover the rare eventuality that the borrower defaults. There is more about this in the topic with title Securities Lending.
Fair enough, there may be more information. The point Iâm making is that I donât like this being forced on me, I have no option to opt out other than terminate my contract which is very militant. Say I decide to close my account, what happens then? The hustle of selling my shares and then transferring them to another provider as T212 does not permit shares to be transferred. And then buying back these shares on the new providerâs which may be a higher price than I sold them for. As I said earlier, Iâd rather pay to use T212 than to be lending my shares if I had that option. They can make that option available to people. Although majority of people here like the free nature of this but Iâm sure people will be happy to pay a reasonable price for these services if they get to decide whatâs actually been done with their money, I would anyway.
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It is a fair point, maybe in future this will be option(al).
But from what I gather in @Richard.W posts, it seems we are pretty much coveredâŚ
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Agreed.
I think most securities lending now is via a Central Counterparty (CCP) that materially lowers counterparty risk.
Mark-to-market happens daily so risk of collateral deficiency is limited.
Dividend wise - manufactured dividends are a thing! They happen. Theyâre legit. Teams work on these things. Risk of âyouâ losing your dividend is virtually zero as youâre covered by Fca rules that say you get what youâre entitled to.
All in all I see virtually zero problems
I say âvirtuallyâ as I was a trader during Lehman and AIG times and collateral on ETFs was broken and hundreds of ETFs stopped trading because of their assets being largely backed by credit from a now uncredit worthy counterpart (AIG). Google it. It happened. But⌠not the case now. Fully collateralised. Youre 99.9% safe.
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@Finki ⌠Who. Are. You? 
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So you lost what you invested in those ETFs or you get the value before they stopped trading?
i surprisingly am in a suspended paradoxical state. while i donât not think any of these changes would put you at risk, i certainly have never been a fan of reading - âaccept this or close your account (with a smirk)â. makes me feel like punching the person in the face as there is no real option youâre getting there (sorry, not a troll, just being brutally honest).
what irks me a little more is that we lose voting rights to the Borrower as per the new 22.6 clause. while not a lot of you may be concerned about voting in AGMs, i for one, believe in partaking in what i invest. this feels like a toy being snatched for me that i so got used to playing with.
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I am your Father. (???)
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Neither.
They shifted the collateral/cash/stock/derivatives eventually to another provider and got them trading again⌠now fully collateralised ⌠but, yeah, confidence took a knock. But not âmuchâ value lost due to the nature of ETFs - there was little to guide price except simple maths.
Google it. It was ETFSecurities Ltd. Theyâre still around (now under WisdomTree) and their founder(s) occasionally crop up in these forums to promote their later projects - which are pretty good I must admit (I donât work for them or know them personally). But fun times. Trading screens just stopped. All market makers in those ETFs refused to play and didnât quote prices. So no liquidity. So no trading for a while. It was an interesting week or so in my brokerage team!
I am not expert in this matter but will it change the way we get dividend and day trade. Will you still be able to day trade as you do now regardless if my shares are on loan or not. If I want to sell them then I can do so at anytime??
And just to confirm share lending will only come invest account and not isa, right?
@Raza It is all explained in the email we have received.
22.3. The shares lending arrangement will not affect your ability to sell your shares at any time, in the same manner as trading any other shares in your Trading 212 account. The Borrower will guarantee liquidity so that Share Lending will not negatively affect Your ability to place a sell order, or to the best execution of such order.
22.4. When Trading 212 lends Your shares, You will continue to be the beneficial owner of the shares and You continue to have the market exposure inherent to beneficial ownership of the shares
(i.e. if the share price increases while you hold the shares but are lending them out, your equity in the position will increase. If the price goes down, your equity will decrease).
22.5. Shares that are lent out are generally recalled from the Borrower before ex dividend-date in order to capture the dividend. Where the recall does not take place, you will be entitled to a payment from the Borrower equivalent to the dividend you would otherwise have received
Staff have commented in posts here that shares in ISA accounts will not be lent out.
They dont say for no reason âignorance is a blissâ , folks who use broker without this transparency would be blissfully unaware and go on with their lives.
However mention some share lending and T&C update which 99% retail clients donât even read and now there is no more bliss 
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Pretty certain the vast majority of ETFs do this too.
So opt out if you want, but by buying ETFs from your favourite providers, you just opted in again.
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