IB will lend your fully-paid US stocks and eligible US corporate bonds only.
None. Your ability to borrow is still based on your stock positions.
Yes. Your Stock Yield Enhancement Program activity is covered by three separate sections in an activity statement:
Yes. IB marks-to-market all positions nightly, which is the industry convention. The mark-to-market is calculated by rounding the end-of-day closing security price up to the nearest dollar. The collateral amount is then calculated by multiplying the rounded security price times the number of shares by 102% US securities (the collateral amount will be at least 100% but may be greater based on applicable laws or market custom).
For example, customer A has enrolled in the SYEP and IB has subsequently loaned 5000 shares of XYZ on behalf of this customer. XYZ's closing price is $22.15. The mark-to-market is calculated by rounding $22.15 * 1.02 = 22.59 rounded up nearest dollar = 23 * 5000 = $115,000.
You are free to sell your loaned stock at any time. Upon the sale, IB recalls the loan from the street and makes normal delivery on your behalf on settlement date. The stock loan is terminated.
You can sell any number of shares including the entire amount if you want. There is no difference in how you trade based on whether or not the shares are lent.
If the stock is fully paid, it will benefit you the same whether or not it has call options written against it.
The US imposes the same tax withholding rates for both dividends and payments in lieu for non-US taxpayers. The default rate is 30%; however, a lower rate may be applied if you qualify for the benefits of a US tax treaty.
There is no impact on capital gain treatment upon the sale of shares that have been lent. Payment in lieu income, or payments received in lieu of dividends or interest is considered ordinary income and does not meet the definition of qualified dividend income and therefore is taxed at ordinary income tax rates rather than qualified dividend rates.
IB will attempt to mitigate the payment of PILs by recalling shares prior to a dividend, however, IB cannot guarantee that the borrower will be able to return the shares within the necessary time frame to avoid PIL treatment.
Yes. The Stock Yield Enhancement Program enrollment process is the same for all eligible accounts, including IRA accounts.
Yes, the Stock Yield Enhancement Program is available to eligible customers of IB Canada Inc. Please click here for more information.