If you participate in Robinhood's securities lending program, Robinhood may lend your stocks or other securities to other parties, and while on loan those securities are not covered by SIPC insurance, though collateral is provided.
This analysis describes what Robinhood's agreement states, permits, or reserves. It does not constitute a legal determination about enforceability. Regulatory applicability and practical outcomes may vary by jurisdiction, enforcement context, and individual circumstances. Read our methodology
This provision authorizes Robinhood to lend securities you own to third parties, which removes SIPC insurance protection on those securities while they are on loan and introduces counterparty risk associated with the borrower.
Participating users' fully paid securities may be lent to third-party borrowers, including Robinhood affiliates, and those securities lose SIPC coverage during the loan period; users receive collateral but bear exposure to the adequacy of that collateral arrangement.
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"By participating in the Securities Lending Income Program, you authorize Robinhood to lend your fully paid and excess margin securities to borrowers, including Robinhood affiliates and third parties. You understand that when your securities are on loan, they will not be covered by SIPC protection, although Robinhood will provide collateral to protect the market value of your securities.— Excerpt from Robinhood's Robinhood Margin Account Rules
REGULATORY LANDSCAPE: Securities lending of customer fully paid securities by broker-dealers is governed by FINRA Rule 4330, which requires written customer authorization, maintenance of 100% collateral, and specific disclosure obligations. SEC Rule 15c3-3 also applies to customer protection requirements. The document's disclosure that lent securities are not covered by SIPC protection engages the Securities Investor Protection Act. Applicable oversight authorities include FINRA, the SEC, and SIPC. GOVERNANCE EXPOSURE: High. The removal of SIPC coverage during the lending period and the introduction of counterparty risk represent material financial exposure for participating users. Compliance teams should verify that collateral maintenance and disclosure practices meet FINRA Rule 4330 requirements and that the opt-in or opt-out structure for program participation complies with the rule's written authorization requirement. JURISDICTION FLAGS: FINRA Rule 4330 applies uniformly to US broker-dealers. State securities regulators may impose additional disclosure requirements. Users in states with enhanced investor protection statutes should review whether those statutes create additional obligations for Robinhood's lending disclosures. CONTRACT AND VENDOR IMPLICATIONS: The authorization to lend to Robinhood affiliates creates a related-party transaction structure that may require additional disclosure and conflict-of-interest assessment. Procurement and compliance teams should evaluate whether the collateral arrangements are documented in a separate agreement and whether those arrangements are subject to audit or verification rights. COMPLIANCE CONSIDERATIONS: Compliance teams should confirm that the securities lending program enrollment process includes adequate written authorization consistent with FINRA Rule 4330, that collateral levels are monitored and maintained at required thresholds, and that customer-facing disclosures clearly communicate the SIPC coverage gap during loan periods.
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This provision authorizes Robinhood to lend securities you own to third parties, which removes SIPC insurance protection on those securities while they are on loan and introduces counterparty risk associated with the borrower.
Participating users' fully paid securities may be lent to third-party borrowers, including Robinhood affiliates, and those securities lose SIPC coverage during the loan period; users receive collateral but bear exposure to the adequacy of that collateral arrangement.
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