Robinhood's plan to let users loan out their stocks to other financial institutions -- a program known as fully paid securities lending -- is taking shape within its app, part of a push to compete with more conventional brokerages. The lending program would rival similar features offered by Fidelity Investments, Morgan Stanley’s E*Trade and Charles Schwab, which already allow customers to earn passive income by loaning stocks they own.
“Through SLIP, you have the opportunity to earn passive income by lending whole shares of stocks to other institutions,” an explanation of the feature says inside the app. “These institutions may borrow stocks to settle trades or facilitate short sales. You’ll be able to buy and sell as usual, even if your stocks are on loan.”