Stock lending is turned on through your Fidelity account settings, but availability depends on your account type and whether you meet Fidelity's requirements

Stock lending lets Fidelity borrow securities you own and lend them to other investors — typically those making short sales. In return, you receive a share of the lending income. The process of enabling it is straightforward, but not all account types support it, and Fidelity has specific rules about which holdings can be lent.

To turn on stock lending, you log into your Fidelity account online, navigate to your account settings, and locate the stock lending option. The exact path depends on whether you use Fidelity.com or a workplace retirement plan portal. Once enabled, Fidelity automatically lends may be able to access securities from your account and deposits lending income into a cash management account or money market fund you designate.

Key Takeaways

  • Stock lending is enabled through Account Settings on Fidelity.com, under the Brokerage & Trading section, and you can turn it on or off at any time.
  • Only individual brokerage accounts, some IRAs, and certain workplace plans support stock lending; 401(k)s and most employer-sponsored retirement accounts do not.
  • Fidelity lends only securities that meet their lending criteria, which excludes restricted stocks, some mutual funds, and holdings under a certain value threshold.
  • Lending income is taxable as ordinary income in the year you receive it, and you remain the legal owner of the loaned shares.
  • You can request that specific holdings not be lent, or you can disable stock lending entirely without penalty.

Which Fidelity account types allow stock lending

Stock lending is available on individual brokerage accounts (including margin and cash accounts), some traditional and Roth IRAs, and certain workplace retirement plans. The availability varies by plan sponsor and plan type, so if you have a workplace 401(k) or similar plan through Fidelity, you will need to check your plan documents or contact your plan administrator to confirm whether stock lending is an option.

Coverdell Education Savings Accounts (ESAs) and Uniform Gifts to Minors Act (UGMA) accounts do not support stock lending. If you hold multiple account types at Fidelity, you can enable stock lending on may be able to access accounts independently — turning it on in one account does not affect the others.

How to enable stock lending on Fidelity.com

Log into your Fidelity account and select Account from the top menu. Choose the account you want to enable stock lending for, then click Account Settings. Look for the Brokerage & Trading section and select Stock Lending.

You will see a toggle or checkbox to enable stock lending. Before you turn it on, Fidelity displays a disclosure explaining that your securities will be loaned out, that you retain ownership, and that you will receive a portion of lending income. Read this disclosure, then confirm that you want to proceed. Once enabled, the setting takes effect when ready, though it may take one to two business days for Fidelity to begin lending may be able to access securities from your account.

You will also need to designate where lending income should be deposited — typically a cash management account, money market fund, or sweep account within your Fidelity account. If you do not select a destination, Fidelity will direct income to your default cash account.

What securities Fidelity will and will not lend

Fidelity lends common stocks, preferred stocks, and some exchange-traded funds (ETFs) that meet their lending criteria. They do not lend mutual funds (other than certain ETFs), restricted stocks, penny stocks, or securities subject to trading halts or regulatory restrictions. Holdings below a certain market value threshold — typically $1,000 or less — are also excluded from lending.

If you own a security that Fidelity cannot lend, it straightforward remains in your account and generates no lending income. You can request that Fidelity exclude specific holdings from lending even if they meet the lending criteria. To do this, contact Fidelity directly or use the exclusion feature in your account settings if available. Excluded securities will not be lent regardless of whether stock lending is enabled.

How lending income is paid and taxed

Fidelity deposits stock lending income into the cash account or money market fund you designated when you enabled the feature. The frequency of deposits varies — some accounts receive income monthly, while others may receive it quarterly or less frequently, depending on lending demand and the specific securities in your account.

Lending income is taxable as ordinary income in the year you receive it. Fidelity reports this income on a Form 1099-INT or Form 1099-OID, depending on how the income is classified. You will receive this form by January 31 of the following year. Keep records of all lending income deposits for your tax return, and consult a tax professional if you are unsure how to report it.

Disabling stock lending or excluding specific holdings

You can turn off stock lending at any time by returning to Account Settings, selecting Stock Lending, and toggling it off. There is no penalty for disabling it. Once you disable stock lending, Fidelity will not lend any new securities, though securities already out on loan may take a few business days to be recalled and returned to your account.

If you want to keep stock lending enabled but prevent Fidelity from lending specific securities, you can add those holdings to an exclusion list. This is useful if you plan to sell a security soon, want to vote shares in a shareholder meeting, or straightforward prefer not to lend certain positions. The exclusion process is done through your account settings or by contacting Fidelity directly.

What happens to loaned shares and voting rights

You remain the legal owner of shares that Fidelity lends out. The borrower has temporary possession and can sell the shares (as in a short sale), but you retain all ownership rights, including the right to receive dividends. Fidelity passes dividend payments to you even while shares are on loan, so you do not lose dividend income.

Voting rights are more complex. If shares are on loan at the record date for a shareholder meeting or proxy vote, you may not be able to vote those shares because the borrower technically holds them on that date. If voting is important to you, you can request that Fidelity recall loaned shares before the record date, or you can exclude those holdings from lending during periods when shareholder votes are scheduled.

Frequently Asked Questions

Can I enable stock lending on a Roth IRA at Fidelity?

Some Fidelity Roth IRAs support stock lending, but not all. Check your account settings or contact Fidelity to confirm whether your specific Roth IRA plan allows it. If it does, the process is the same as enabling it on a brokerage account.

What if I want to sell a security that is currently loaned out?

You can sell loaned securities at any time. Fidelity automatically recalls the shares from the borrower when you place a sell order, which usually happens within one business day. The sale then proceeds normally, and you receive the proceeds.

Do I lose money if the borrower does not return my shares?

No. Fidelity is responsible for ensuring that loaned securities are returned. If a borrower fails to return shares, Fidelity must replace them or compensate you. Your shares are protected by Fidelity's lending agreement and regulatory requirements.

How much money can I make from stock lending?

Lending income varies widely depending on demand for the securities you own, market conditions, and the size of your holdings. Some accounts earn a few dollars per month, while others earn more. There is no way to predict earnings in advance, and some securities may never be lent if demand is low.

Does enabling stock lending affect my account fees or commissions?

Enabling stock lending does not change your account fees or trading commissions. Stock lending is a separate feature that generates income for you; it does not alter the cost of buying or selling securities.