Barron’s: Interactive Brokers plans low cost, high tech push for securities lending

Interactive Brokers plans to use technology and low prices to make inroads in securities lending, cashless transactions and other services.

If customers let the firm lend their shares to short sellers, Interactive Brokers will split any money earned, generating extra yield on long stock positions. Many brokerage houses unilaterally lend customers’ stocks to short sellers and share nothing. Interactive Brokers’ clients also can borrow against securities in their accounts at rates of 2.5% or less.

Although the brokerage units of many much bigger financial institutions loan money against stock portfolios, Thomas Peterffy, the firm’s founder, chairman and CEO, contends his firm is a step ahead. “Banks are lagging behind in their use of customer-facing technology,” he says, “and carry an obsolete, high-cost infrastructure that prevents them from competing on price.”

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