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How To Turn Off Share Lending On Robinhood [Complete Guide]

This article compiles a step by step process on how to turn off Share Lending or Margin Investing on Robinhood.
turn off share lending on robinhood

If you are looking to turn off share lending on Robinhood then you are at the right place. Robinhood is a well-known commission-free trading platform that lets its users trade stocks, options, crypto without having to pay any fee. The platform has ranges among the best trading platforms and this reputation is represented by its number of active users.

"Share Lending" also known as "Margin Investing" is an important feature for any trader on any trading platform and Robinhood enables the share lending feature by default on the mobile app. and I've come across many forums where traders ask how to turn off share lending on Robinhood.

Robinhood uses this feature to attract all sorts of traders including both beginners and experts to get stocks which the platform will loan out to unrelated investors and/or firms of which you wouldn't get any interest. The goal or aim of every trader is to make out profit. Can you really call yourself a trader if you do not make profit? This is why turning off the Margin Investing feature on Robinhood  is very important.

Many traders flee the platform because of this feature and if you are not good using the feature.

You can always transfer your stocks from Robinhood to TD Ameritrade, Fidelity, Webull.

You aren't obligated to transfer to another platform, and if you really love using Robinhood, then, continue reading.

That being said, this article compiles a step by step guide to turn off Share Lending or Margin Investing on Robinhood.

CHECK ALSO: How Many Day Trades Can You Make On Robinhood?

What is Share Lending or Margin Investing?

You can use Robinhood's margin investing tool to borrow money to buy securities. Margin investing or Share Lending allows you to borrow money based on the value of specific securities in your brokerage account. Margin investing allows you to be more flexible with your money: if you notice a market opportunity and want to invest more, you can do so right away without having to make a deposit with your bank.

Margin investing access is not automatic, unlike Instant Deposits, which you get by default. You must upgrade to Robinhood Gold and apply for eligibility.

If you sign up for Robinhood Gold and apply for margin investing, you may be eligible for additional buying power. This additional buying power indicates the amount of money you're permitted to lend from the platform to invest.

CHECK ALSO: How To Get Unlimited Day Trades On Robinhood

How Does Share Lending Work?

The owner of shares or bonds temporarily transfers them to a borrower in the form of securities lending. In exchange, the borrower gives the lender other shares, bonds, or cash as collateral and pays a borrowing fee. As a result, securities lending can be utilized to gradually boost fund returns for investors.

CHECK ALSO: What Happens If You Are Marked As A Pattern Day Trader On Robinhood?

Can Robinhood Lend Out Shares?

Yes, you can lend out shares with Robinhood. But don't be worried; there are ways to accomplish this. Margin Investing is used as a means to generate extra income from equities that would otherwise remain untraded in their portfolio.

Short sellers are frequently stock borrowers, as they provide lenders with security in the form of cash or other securities.

So, if your shares are borrowed and given to short-sellers, Robinhood obtains collateral on your behalf to ensure that your shares are safe, and you receive the collateral if they are not returned. In most cases, the collateral is about equal to the value of the lent share.

Mutual funds, sovereign wealth funds, pension funds, and exchange-traded funds (ETF) providers are examples of lenders because they are long-term investors in equities.

Brokerage firms such as Robinhood participate in share lending utilizing shares held in retail investors' brokerage accounts — this means that shares held in retail investors' accounts (investors like you) are utilized to participate in share lending. The reason for this is because it allows Robinhood to keep their management fees low for their investors, so if your share is lent, your management fee is reduced.

Securities lending refers to a practice that extends beyond equities to include bonds and commodities in addition to equities. This has recently grown more popular since price action has reduced management fees to near nil, leaving investment firms in need of new revenue streams. According to DataLend, a financial data business, global income from security lending is expected to reach $7.66 billion in 2020, including $2.87 billion in broker-to-broker activity.

If you're a short seller of a stock, share lending comes in handy because you'll need to borrow shares to cover your bearish bets. Critics say that the practice of share lending harms share fund investors since investment firms give up their voting rights when they lend out shares. They may also try to own stocks that would be easier to rent out.

CHECK ALSO: Can You Day Trade On Robinhood Without 25K?

Can You Turn Off Margin Investing On Robinhood?

Yes, you can turn off Margin Investing on Robinhood by opening the mobile app by navigating to the setting and margin investing tab of the app.

However, you can also stop investing on margin in Robinhood in 2 ways — You can deposit money to your brokerage account to cover any margin used. You may also choose to sell your shares. You can sell any position you own because margin is a feature of your entire securities account, not individual stocks.

You can also reduce your margin balance if you want. To reduce your margin balance, you can deposit funds or liquidate any of your positions. You can see your current margin used in your account overview (Account tab > Menu > Investing) or on the Buying Power breakdown screen (Investing tab > Buying Power).

CHECK ALSO: How To Turn Off Instant Settlement On Robinhood?

How To Turn Off Share Lending/Margin Investing On Robinhood?

Here's how to turn off Share Lending (Margin Investing) in the Robinhood Android and iPhone mobile application:

  1. Open the Robinhood app on Android or iPhone (iOS).
  2. Tap the "Account" button in the bottom-right corner of the screen.
  3. Select the "Settings" option.
  4. Choose "Robinhood Gold" from the list.
  5. Next, tap "Margin Investing" at the top.
  6. Tap "Disable Margin Investing".
  7. Return to the general "Account" screen.
  8. Navigate to the "Investing" menu.
  9. Select "Day Trade Settings" from the list.
  10. Turn off the "Instant Settlement" option.

Only paying Robinhood Gold customers have the ability to turn off Margin Investing in the app. However, anyone can disable Instant Settlements, which will also turn off Share Lending on the account. Changes to the Instant Settlement settings will temporarily halt purchases, but traders will still be able to sell any assets in their portfolio.

Short-sellers and hedge funds can benefit from share lending/margin investing, which many independent amateur investors detest. Those that are opposed to the idea will, of course, want to make these Robinhood settings modifications as fast as possible.

CHECK ALSO: How To Setup A Stop Loss On Robinhood?

Frequently Asked Questions on How to Turn Off Share Lending On Robinhood

How to Borrow Money From Robinhood

To borrow money from Robinhood, you need to be a Robinhood Gold customer. Robinhood Gold users can use the Robinhood's margin investing feature to borrow money to buy assets. This allows them to borrow money based on the value of specific securities in their brokerage account.

How To Pay Back Margin On Robinhood?

You must repay your margin loan regardless of the underlying value of the securities you purchased. Robinhood Financial reserves the right to adjust its maintenance margin requirements at any moment and without warning.

If your account's equity falls below the minimum maintenance requirements (which vary per security), you'll need to deposit more cash or acceptable collateral. If you don't fulfill your minimums, Robinhood Financial may be required to sell part or all of your investments, with or without your consent.

How Much Margin Does Robinhood Give?

The amount of investable margin Robinhood give depends on the value and volatility of your investments, according to Robinhood's margin maintenance requirements.

CHECK ALSO: How To Transfer Buying Power From Robinhood To Bank

Final Thoughts On How to Turn Off Share Lending On Robinhood

Robinhood is a leading crypto, stock, options trading platform that comprises a huge amount of active users. The platform however, enables the Margin Investing or Share Lending feature by default on the mobile app. The drawback of this feature is, you do not get any interest for loaning out your shares.

You can always turn off share lending on Robinhood directly from the mobile app. In this way, your shares wouldn't be loaned out for 0% interest.

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About the Author

Tebid Kelly is a Graphic Designer, Web Developer, Ethical Hacker, Programmer, and Content Creator who showcases his skills and experience on his blogs. He also has much love for finance apps such as Cash App, Venmo, PayPal, Zelle, etc on which he ha…

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