The income which a client receives in exchange for shares lent through the Stock Yield Enhancement Program depends on loan rates established in the over-the-counter securities lending market. These rates can vary significantly, not only by the particular security loaned but also by the loan date. To determine the customer’s portion of these fees, the Market Interest Rate % is applied to the loan collateral. This daily Gross Lending Interest is split equally between IBKR and the client, as IBKR takes a portion of the gross interest paid in exchange for initiating, managing, and terminating transactions.
For example, assume loan collateral of $10,000 and an annualized Market Interest Rate of 15%. In this case the daily Gross Lending Interest would be $4.16 (($10,000 *.15)/360), of which $2.08 would accrue to the client and $2.08 to IBKR. Lending interest is calculated and accrued daily similar to interest credits.