Hello there! Are you looking to regain full control over your ETRADE investments and understand every aspect of your holdings? You've come to the right place. Many investors are surprised to learn about "stock lending" programs and the implications they can have. If you've been participating in ETRADE's Fully Paid Lending Program (FPL) and now wish to opt out, this comprehensive, step-by-step guide is designed specifically for you.
Let's dive in and ensure your investment strategy aligns perfectly with your preferences!
Understanding E*TRADE's Fully Paid Lending Program (FPL)
Before we jump into turning it off, it's helpful to understand what ETRADE's Fully Paid Lending Program is. Essentially, it's a program where you, as a client, agree to allow ETRADE to borrow certain fully-paid-for securities (meaning, stocks you own outright, not on margin) from your account. E*TRADE then lends these shares to other investors or market participants, often those looking to short-sell the stock. In return, you may earn income on the shares that are successfully lent out.
Why might E*TRADE offer this?
It's a way for brokers to facilitate market liquidity and provide shares for short selling or other strategies. For you, it's presented as a way to potentially earn passive income on your holdings.
What are the considerations?
While earning extra income sounds appealing, there are important considerations:
Loss of Voting Rights: While your shares are on loan, you typically lose your voting rights as the legal title temporarily transfers to the borrower.
Payments in Lieu of Dividends: If a dividend is paid on a stock that's on loan, you might receive a "payment in lieu of dividend" from the borrower instead of a qualified dividend directly from the company. This can have different tax implications.
Counterparty Risk (though typically mitigated): While E*TRADE aims to work with highly creditworthy borrowers and over-collateralize loans (often with cash collateral), there's a theoretical risk that the borrower could default and fail to return the securities. However, collateral is usually held to protect against this.
Impact on Holdings: Your shares being lent out might contribute to short selling, which could theoretically put downward pressure on the stock price.
If these considerations outweigh the potential for passive income, then turning off stock lending is the right move for you.
Step 1: Discover if You're Enrolled and Identify Lent Shares
Before you can turn off something, you need to confirm it's even on! This initial step will help you determine if you're currently participating in E*TRADE's Fully Paid Lending Program and whether any of your shares are currently on loan.
Sub-heading: Check Your Program Enrollment Status
Log in to your E*TRADE account: Go to the official E*TRADE website (us.etrade.com) and log in with your User ID and password. This is your primary gateway to managing your investments.
Navigate to Account Settings or Programs: Once logged in, look for sections related to "Account Settings," "Account Features," "Programs," or "Services." These are often found under a main "Accounts" or "Profile" tab.
Locate the "Fully Paid Lending Program" section: E*TRADE usually has a dedicated section for this program. Look for terms like "Fully Paid Lending Program," "Securities Lending," or similar phrases. Here, you should see your enrollment status. It will typically indicate whether you are "Enrolled," "Not Enrolled," or if your enrollment is "On Hold."
Sub-heading: Identify Shares on Loan
Go to your "Portfolios" page: Even if you're enrolled, not all your eligible shares will always be on loan. To see which ones are, navigate to the "Accounts" tab and then select "Portfolios."
Look for the "FP" notation: E*TRADE explicitly states that any loaned shares will always be visible in your account with a notation that the shares are on loan. Specifically, positions on loan can be seen on the Portfolios page with an "FP" notation. This "FP" stands for "Fully Paid" and indicates they are part of the lending program.
Review Transaction History: For a more detailed breakdown of past and current lending activity, you can also check the "Reports" section of your transaction history. Here, you should find a "daily loan status report" that shows which positions were on loan, the rate, and accrued interest.
Action Item: Make a note of whether you are enrolled and if any shares are currently being lent out. This information will be useful for understanding the next steps.
Step 2: Access the Opt-Out Option
Now that you've confirmed your enrollment status, it's time to find the mechanism to turn off stock lending. E*TRADE typically makes this an online process.
Sub-heading: Online Account Management
Return to "Account Features" or "Programs": Based on your exploration in Step 1, go back to the section where you found the Fully Paid Lending Program information.
Look for an "Opt-Out" or "Disable" button/link: Within the Fully Paid Lending Program section, there should be a clear option to opt out or disable your participation. This might be a button, a hyperlink, or a checkbox. It's usually designed to be straightforward.
Review Program Agreements: Before confirming your opt-out, E*TRADE will likely present you with the program agreement and risk disclosure. While you may have reviewed this when you initially opted in, it's a good practice to quickly skim it again to understand the implications of opting out. This re-affirmation helps ensure you're making an informed decision.
Sub-heading: Confirming Your Decision
Follow On-Screen Prompts: The system will guide you through a confirmation process. This might involve clicking "Confirm," "Submit," or answering a quick question to verify your intent.
Anticipate Processing Time: Once you submit your request, understand that it might not be instantaneous. While E*TRADE aims for efficiency, it may take a few business days for the opt-out to be fully processed and for any currently lent shares to be recalled.
Important Note: If you cannot find the opt-out option online, or if you encounter any difficulties, do not hesitate to proceed to Step 3. ETRADE's customer service is there to assist.*
Step 3: Contact E*TRADE Customer Service (If Needed)
Sometimes, the simplest way is to speak directly with a human. If you're having trouble finding the opt-out option online, or if you prefer direct assistance, reaching out to E*TRADE's customer service is an excellent next step.
Sub-heading: Gather Your Account Information
Have your User ID and Account Number ready: This will expedite the process when you speak with a representative. Your account number can usually be found on your statements or within your online account profile.
Be prepared to verify your identity: For security purposes, they will likely ask you a few verification questions.
Sub-heading: Reach Out by Phone
Call E*TRADE Customer Service: The general customer service number for ETRADE from Morgan Stanley is typically 1-800-387-2331. It's advisable to check the "Contact Us" section on the official ETRADE website for the most current phone numbers and operating hours, as these can sometimes change.
Clearly state your intention: When connected with a representative, clearly state that you wish to opt out of the Fully Paid Lending Program and disable stock lending on your account(s).
Request confirmation: Ask the representative to confirm that your request has been processed and inquire about the expected timeframe for the opt-out to take effect and for any outstanding loaned shares to be returned.
Sub-heading: Alternative Contact Methods
Secure Message/Chat: E*TRADE often provides secure messaging or chat options within their online platform. You can use these methods to send a written request to opt out. This can be useful for keeping a written record of your request.
Mail: While less immediate, you could also send a written request by mail to E*TRADE's correspondence address. This is generally reserved for situations where other methods are not feasible.
Remember: Patience is key. The representative will guide you through the process and address any questions you may have.
Step 4: Verify the Opt-Out and Share Recall
After initiating the opt-out, it's crucial to follow up and ensure your request has been successfully implemented and that any previously loaned shares have been returned to your direct ownership.
Sub-heading: Monitor Your Account
Check Your Portfolios Page Regularly: Over the next few business days after your opt-out request, frequently check your "Portfolios" page. You should see the "FP" notation disappear from any shares that were previously on loan. This confirms their return to your account.
Review Transaction History: Keep an eye on your "Reports" or "Transaction History" section. You should see entries indicating the return of borrowed securities and the cessation of any lending income.
Sub-heading: Confirm Program Status
Re-check the "Fully Paid Lending Program" section: Go back to the "Account Features" or "Programs" section where you initially found the enrollment status. It should now clearly state that you are not enrolled or that the program is disabled for your account(s).
Troubleshooting: If after the advised processing time (usually a few business days) you still see shares marked as "FP" or your program status remains active, contact ETRADE customer service again. Reference your previous interaction (if you called) or the date of your online request.*
Step 5: Understand Future Implications
Congratulations! You've successfully opted out of E*TRADE's stock lending program. Now, it's important to understand what this means for your future investment activity.
Sub-heading: Full Control Restored
Voting Rights: You will now fully retain all voting rights for all shares held in your account.
Dividend Treatment: Any dividends received on your shares will now be qualified dividends (assuming they meet the IRS criteria), rather than "payments in lieu of dividends," which can have different tax implications.
No Lending Income: While you've removed the risks and implications of stock lending, you will also no longer receive any passive income that might have been generated from lending your shares.
Future Purchases: Any new stock purchases you make will automatically not be eligible for lending through this program.
Sub-heading: Re-enrollment Considerations
Can I re-enroll later? If your circumstances change and you decide you want to participate in the Fully Paid Lending Program again, you can typically re-enroll. However, be aware that there might be a waiting period after opting out before you are eligible to opt back in. Always check E*TRADE's current policies if you consider re-enrollment.
10 Related FAQ Questions
Here are some frequently asked questions related to stock lending programs and E*TRADE:
How to check if my E*TRADE account is enrolled in stock lending?
You can check by logging into your E*TRADE account, navigating to the "Accounts" tab, then typically looking under "Account Features" or "Programs" for the "Fully Paid Lending Program" section.
How to identify which specific shares are being lent out on E*TRADE?
Go to your "Accounts" tab, then "Portfolios." Any shares currently on loan will be marked with an "FP" notation next to the position.
How to understand the risks of E*TRADE's stock lending program?
The primary risks include the temporary loss of voting rights, potential for "payments in lieu of dividends" which can have different tax treatment, and a theoretical counterparty risk (though collateralized). E*TRADE typically details these risks in the program's disclosure documents.
How to know how much income I've earned from stock lending on E*TRADE?
You can typically find this information in the "Reports" section of your E*TRADE account, often under a "daily loan status report" or similar income statements related to the lending program.
How to determine if my E*TRADE account is eligible for stock lending?
E*TRADE's Fully Paid Lending Program is generally available to clients with IRA, cash, or margin accounts, and often requires a minimum of $200,000 in liquid net worth or assets under management across all accounts linked to the same user ID. Margin accounts must also have a very small or no margin balance.
How to contact E*TRADE customer service regarding stock lending?
You can contact E*TRADE customer service by calling their general support line at 1-800-387-2331. You may also find options for secure messaging or chat within their online platform.
How to tell if "payments in lieu of dividends" are taxable differently?
Yes, payments in lieu of dividends (P.I.L.) are typically taxed as ordinary income and do not qualify for the lower qualified dividend tax rates, which can result in a higher tax liability. It's always best to consult a tax advisor for personalized guidance.
How to quickly recall my loaned shares if I need to sell them?
When you opt out of the program, ETRADE will recall your loaned shares. Even while shares are on loan, you typically retain the right to sell them at any time. ETRADE will handle the recall process to facilitate your sale.
How to re-enroll in the E*TRADE Fully Paid Lending Program after opting out?
You can generally re-enroll in the program through your online account management, similar to how you opted out. However, be aware that there might be a short waiting period before you are eligible to opt back in after a recent opt-out.
How to ensure my future E*TRADE stock purchases are not lent out?
By successfully opting out of the Fully Paid Lending Program, all your current and future fully paid stock purchases will automatically be excluded from the program and will not be lent out by E*TRADE.
