Robinhood launches stock lending program in revenue diversification push

div classBodysc17zpet90 cdBBJodivpBy John McCrankp

pNEW YORK Reuters – Robinhood Markets Inc on Wednesday said it launched a fullypaid securities lending program, which lets the online brokers users lend out shares they own through the popular app to market participants and passively collect a cut of the fees.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pThe move is part of Robinhood‘s efforts to diversify its income away from transactional revenue, which made up nearly three quarters of the company’s revenue in the first quarter and were down 48 from a year earlier when individual investors were piling into socalled meme stocks.p

pRobinhood already makes money by lending out shares that its customers buy on margin, but the new fullypaid program will include all shares held by its nearly 23 million users, so long as they opt in and meet certain qualifications.p

pThe new program will potentially bring in 1to2 times the revenue that Robinhood‘s margin securities lending program generates, the company’s Chief Executive Officer, Jason Warnick, said on a call with analysts last week. p

pThe Menlo Park, Calif.based company earned 137.2 million from margin securities lending in 2021. p

p“Transactional revenue has been the core component of the revenue but as you build out the offering those other components become a more meaningful portion,” Steve Quirk, Robinhoods chief brokerage officer, said in an interview.p

pDemand to borrow shares for a fee often comes from institutional investors and other brokerages looking to settle trades or facilitate short sales.p

p“It‘s just another way, particularly in a challenging market, like the one we’ve experienced lately, to generate a little bit of additional income off of an existing portfolio,” said Quirk.p

pTo qualify for the fullypaid lending program, Robinhood users must have 5,000 in total account value, at least 25,000 in reported income or some trading experience, he said. p

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pp Reporting by John McCrank editing by Bernard Orrp

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