In an environment of ongoing market uncertainty, brokerage platforms are increasingly focused on diversifying their revenue streams and reducing reliance on traditional trading activity, driving increased demand for products like High-Yield Cash1 and Fully Paid Securities Lending (FPSL).
That’s why we’re excited to launch Alpaca’s FPSL program for US equities through our Broker API. This offering helps empower our partners to offer passive yield, creating new revenue for both them and their customers.
What Is FPSL?
FPSL programs enable customers to lend securities that they fully own beneficially. These loans are typically made to institutions such as prime brokers, which borrow shares to facilitate short selling, market making, or hedging purposes.
In return, the borrowing institution pays a fee. That fee received is split between the broker and the clients, enabling both parties to earn passive income from otherwise idle assets often with no effort required on the part of their customer.
Why Brokers Are Embracing FPSL
There are many benefits to offering an FPSL program, including the creation of a new revenue stream, asset retention, and scalable growth.
New Revenue Generation
FPSL provides a relatively low-risk, passive income stream, allowing brokerages to earn a share of the interest paid by borrowers when a client’s stock is lent out. When scaled across tens of thousands of accounts—particularly those holding in-demand securities—this can help generate meaningful income.
Overall, FPSL programs can offer an effective way for both brokers and their clients to earn passive income, making it a powerful tool for attracting new customers and deepening relationships with existing ones.
Asset Retention and AUC Growth
Because investors can potentially earn additional yield by simply holding onto their assets, FPSL creates a strong financial incentive to keep portfolios at your brokerage over the long term. This may make customers more likely to consolidate accounts or transfer assets from other platforms, knowing they can potentially earn passive income with no extra effort.
Please read Important Risk Disclosures With Respect To Participating In Fully Paid Securities Lending Transactions carefully before deciding whether to participate in lending Fully Paid Securities or agreeing to enter into a Master Securities Lending Agreement with Alpaca Securities LLC.
These disclosures describe important characteristics of, and risks associated with engaging in, securities-lending transactions.
Alpaca’s Solution
Flexibility
We offer a high degree of flexibility, including customizable tiers for pricing and revenue splits. This allows you to tailor revenue-sharing models to suit your specific business goals or client profiles.
Transparency
Gain complete visibility into all lending activities down to the individual securities level. As such, you and your clients can see exactly which securities are being lent out, when they are being lent, and all the details related to those lending activities. This level of detail builds trust and allows both parties to have a clear understanding of how the program benefits them.
Scalability
Our platform is designed for seamless scalability, requiring minimal integration with your existing systems. It's a fully managed, end-to-end solution that handles everything including lending, reporting, and interest booking. This means you can scale your securities lending operations and free your team to focus on strategy and growth.
You can learn more about integrating with Alpaca’s Broker API on our Fully Paid Securities Lending documentation page.
Customer Protection
Securities on loan are not covered by SIPC. Instead, cash collateral is used to safeguard your loaned securities. We maintain cash collateral equivalent to at least 100% of the value of your loaned securities at a third-party bank. In the event that Alpaca files for bankruptcy and is unable to return the borrowed securities, this bank would release cash collateral to customers for the value of the loaned securities.
Ready to Build An FPSL Program?
We're already building FPSL programs with many partners and are prepared to onboard several more.
“We are incredibly excited and proud of our FPSL program which will help partners deliver new yield opportunities in a secure, compliant, and seamless way,” says Yoshi Yokokawa, Co-Founder and CEO of Alpaca. “This launch represents just the beginning of what we believe is a major opportunity for brokers to transform how customers engage with their portfolios.”
For current partners, please reach out to your Customer Success Manager or Alpaca’s global support team at [email protected].
For new partners who are looking to utilize Alpaca’s Broker API, please reach out to [email protected] or fill out the form below.
FPSL for Trading API is coming soon.
1. ‘High-Yield Cash’ or ‘High-Yield Cash API’ is a technology product offered by AlpacaDB, Inc. (“Alpaca”) which allows users to, among other things, access securities brokerage services provided by Alpaca Securities LLC ("Alpaca Securities"), including but not limited to the Alpaca Securities LLC FDIC Bank Sweep Program (the “FDIC Bank Sweep” or “Program”). Alpaca Securities is a member of FINRA/SIPC, and is a wholly-owned subsidiary of AlpacaDB, Inc. Please see alpaca.markets/disclosures for further information and important disclosures.
The content of this article is for general informational purposes only. All examples are for illustrative purposes only.
All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. There is no guarantee that any investment strategy will achieve its objectives. Please note that diversification does not assure a profit, or protect against loss. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.
Securities brokerage services are provided by Alpaca Securities LLC ("Alpaca Securities"), member FINRA/SIPC, a wholly-owned subsidiary of AlpacaDB, Inc. Technology and services are offered by AlpacaDB, Inc.
Cryptocurrency services are made available by Alpaca Crypto LLC ("Alpaca Crypto"), a FinCEN registered money services business (NMLS # 2160858), and a wholly-owned subsidiary of AlpacaDB, Inc. Alpaca Crypto is not a member of SIPC or FINRA. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC. Please see the Disclosure Library for more information.
This is not an offer, solicitation of an offer, or advice to buy or sell securities or cryptocurrencies, or open a brokerage account or cryptocurrency account in any jurisdiction where Alpaca Securities or Alpaca Crypto respectively, are not registered or licensed, as applicable.
