Did you know that you can rent shares that you don't normally trade? In addition to receiving rent, you can earn dividends as normal. So see below how such a rental works.
Did you know you can rent shares? Here's how
Leasing shares follows the same logic as leasing anything else, such as a property or a vehicle. The campaign consists of two parties: the owner (genus) and the tenant (taker).
In other words, the investor owns the shares and offers them to another investor who is interested in using them as a loan. Contract means the establishment of rates, guarantees and lease terms, that is, the expiration of the lease contract.
This is interesting for the shareholder (donor), as it is a way to increase the profitability of the portfolio. For those who rent shares, it is necessary to operate in multiple ways, such as short selling or long and short operations, in a favorable way, in shares that are about to fall.
How does a stock lease work?
For the owner (donor), it is important to inform the broker of his interest and the estimated conditions under which the shares can be rented. Brokers offer paid custody and clients can rent their shares to interested parties.
For tenants (borrowers), it is necessary to have a guarantee in accordance with the brokerage firm's requirements, which can be guaranteed by means of Direct Treasury Bonds, CDBs, LCI/LCA or other means. There is a requirement to guarantee the compensation of the funds at the end of the contract term. After depositing the deposit, the “tenant” investor may rent out his/her share.
It is worth noting that the entire process is mediated by a broker or intermediary. Investors do not need to have a direct relationship. Both individual investors and investors can benefit from the service.
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