Is Stock Lending Halal? IBKR and Robinhood Explained
Lending your shares for a fee is impermissible according to AAOIFI, a leading standard-setter for Islamic finance, and the Fiqh Council of North America (FCNA). Jordan's General Iftaa' Department also prohibits lending company shares, and Mufti Faraz Adam says most scholars hold this view.
IBKR's Stock Yield Enhancement Program and Robinhood Stock Lending both work this way. Your broker borrows your shares, often for short selling, and pays you a fee. Malaysia's securities regulator accepts some differently structured forms of share lending, covered below.
Key takeaways
- AAOIFI and the FCNA prohibit lending shares for a fee, and Jordan's General Iftaa' Department agrees.
- A share stands for changing company assets, which fits poorly with a loan or lease. If the deal is treated as a loan, the fee also raises a riba (interest) concern.
- Check whether you are enrolled, then turn lending off (steps below).
Table of contents
- Should I participate in a stock yield enhancement program?
- How stock lending works: a simple example
- What is IBKR's Stock Yield Enhancement Program?
- How Robinhood stock lending works
- Why scholars object to stock lending
- How to turn off stock lending
- What to do with stock lending income you already earned
- Summary
- Frequently asked questions
Should I participate in a stock yield enhancement program?
If you follow AAOIFI or the FCNA, you should decline. Mufti Faraz Adam advises avoiding contracts that let a broker lend your shares for short selling. Lending also costs you your proxy vote and possibly SIPC protection, and dividends may arrive as substitute payments taxed as ordinary income.
How stock lending works: a simple example
Say you hold 100 shares and enroll in your broker's lending program.
- Your broker borrows the 100 shares and lends them on, often to a short seller.
- The short seller sells them on the market.
- Your broker holds collateral, such as cash, worth at least the shares' value.
- The short seller pays a fee. Your broker keeps part and pays you the rest.
- When the loan ends, the short seller buys 100 shares and returns them.
At Robinhood, a loan earning $20 in a month pays you up to $3 (15%). The borrower must return the same number and class of shares, usually different from the ones you lent. Robinhood's Stock Lending Agreement lets the borrower return "an identical Security."
What is IBKR's Stock Yield Enhancement Program?
The Stock Yield Enhancement Program (SYEP) is IBKR's stock lending program. Its risk disclosure (Form 4215) states that IBKR "will be the borrower in respect of each loan." The shares are "typically used to facilitate short sales." You receive 50% of a market-based rate on the collateral value.
How Robinhood stock lending works
Robinhood Stock Lending lends your shares to Robinhood Securities, LLC. It uses them "to facilitate trade settlements, for onward lending, or to use as collateral for other loans," and says they will likely support short sales. You receive up to 15% of the gross lending revenue.
| IBKR SYEP | Robinhood Stock Lending | |
|---|---|---|
| Who borrows your shares | IBKR, as principal | Robinhood Securities, LLC |
| Your share of revenue | 50% of a market-based rate on the collateral value | Up to 15% of gross lending revenue |
| Collateral | Cash or US Treasuries in a pledge account | Cash at a third-party bank in a pledge account |
| Interest on collateral | Kept by IBKR | Kept by Robinhood |
| Dividends | May receive substitute payments | May receive manufactured dividends |
| Voting | Forfeited while on loan | Waived while on loan |
| SIPC | May not protect you as a lender | Loaned stocks are excluded |
| How to opt out | Client Portal > Account Settings | View Stock Lending > Yes, disable Stock Lending (per account) |
Program terms as of November 2026. The two revenue figures use different bases, so the percentages are a poor guide to which pays more.
Why scholars object to stock lending
The main objection is a direct ruling against lending shares. The riba analysis supports it, and short selling adds a separate concern.
AAOIFI and the FCNA prohibit lending shares
AAOIFI (the Accounting and Auditing Organization for Islamic Financial Institutions) addresses this in Shariah Standard 21:
It is not permitted to lend shares of corporations.
It also bans renting shares to sell them and return similar ones, and permits a free loan only for pledging the shares or passing on their profit.
The FCNA reaches the same conclusion in its fatwa (religious ruling) on investing in stocks:
Another impermissible transaction is lending (iqrāḍ) or leasing (ījār) shares for a fee, as the underlying assets of a share do not align with the rulings of these contracts.
The shares you get back represent something different
The General Iftaa' Department of Jordan ruled in 2024 that lending company shares is impermissible. A company's assets keep changing, so the shares returned represent a different mix of assets. The fatwa forbids even a free share loan.
Why the fee raises a riba concern
Many scholars treat a share loan as a qard (loan), repaid with equivalent shares. On that reading, the fee is a benefit set for the lender, which AAOIFI's loan standard, Shariah Standard 19, treats as riba:
The stipulation of an excess for the lender in loan is prohibited, and it amounts to riba ...
That classification is itself debated, so this argument supports the direct rulings above. See our guide to riba.
Your shares support short selling
AAOIFI and the FCNA both prohibit short sales, and the International Islamic Fiqh Academy's Resolution 63 applies this to a short sale backed by a broker's promise to lend. You are one step removed as the lender, so the concern rests on the Qur'anic principle of avoiding help in wrongdoing (5:2). See our day trading guide.
Do any scholars allow stock lending?
Malaysia's Securities Commission Shariah Advisory Council (SAC) has accepted some forms of securities lending. It aligned securities lending with ijarah (lease) in 1998, using istihsan (juristic preference, an exception to the general rule). In 2017 it approved iSSB-NT, a Bursa Malaysia model built on two outright sales with collateral. These rulings cover Malaysia's regulated market and its own contract structures, which differ from IBKR's and Robinhood's programs.
How to turn off stock lending
Check whether you are enrolled first. Some brokers enroll you by default.
IBKR: in Client Portal, go to Account Settings to check and end your SYEP enrollment. You can terminate "at any time for any reason," though IBKR may refuse clients who later want to rejoin.
Robinhood: go to Account > Menu > Investing > View Stock Lending, switch it off for each account and confirm with Yes, disable Stock Lending. This ends outstanding loans.
M1: most clients opt in when creating their login, and opening a new account re-enrolls you across all accounts. To check your status, click your profile name icon, then Accounts, then Fully paid securities lending. To opt out, email M1 with the subject "Securities Lending Opt-Out" and the last 3 digits of each account number.
Public: the program is run by its clearing firm, Apex. To opt out, email [email protected] with the subject "Securities Lending Opt-Out."
What to do with stock lending income you already earned
The ruling we found covers interest in general, rather than lending fees by name. IslamQA says such money may be given to the poor "in order to get rid of it," separately from sadaqah (charity), and rejects continuing to earn it so you can donate it. Ask a qualified scholar how this applies to your fees and any substitute dividends, and see our stock purification guide.
Summary
AAOIFI, the FCNA, Jordan's General Iftaa' Department and Mufti Faraz Adam all treat lending shares for a fee as impermissible. Malaysia's SAC accepts some differently structured forms within its own market. A stock can pass Shariah screening while lending it raises a separate question: screening covers the company's business and financial ratios, and lending depends on your broker's contract. You can check any holding in Zoya, which screens using AAOIFI standards, and read our halal investing 101 guide for the rest.
This article is for education only and is not investment advice. Consult a qualified scholar about your own situation.
Frequently asked questions
Is stock lending halal?
Under the majority view, lending shares for a fee is impermissible. AAOIFI Shariah Standard 21 prohibits lending company shares, the FCNA rules out lending or leasing shares for a fee and Jordan's General Iftaa' Department agrees. Malaysia's SAC accepts some differently structured forms within its regulated market.
Is IBKR's Stock Yield Enhancement Program halal?
Under AAOIFI's and the FCNA's rulings, it is impermissible. Under SYEP, IBKR borrows your shares as principal, lends them on for uses that typically include short sales and pays you a fee. That is the fee-based share lending both bodies prohibit.
Is the Stock Yield Enhancement Program worth it?
Income from enrollment is uncertain. IBKR decides whether and when to borrow your shares, and the fee moves with market rates. You also give up your proxy vote while shares are on loan. For a Muslim investor, the Shariah question comes first, whatever a loan might pay.
Is the Stock Yield Enhancement Program safe?
IBKR says SIPC may not protect you as a lender, so the collateral may be all you can claim if IBKR fails. You also lose your proxy vote. Over a dividend record date, you may receive substitute payments, likely taxed at a higher rate than qualified dividends.
Is Robinhood stock lending halal and safe?
It raises the same Shariah concerns as SYEP. Robinhood Securities borrows your shares, can sell or lend them on and pays you up to 15% of the lending revenue as a "Loan Fee." Robinhood says loaned stocks and the cash collateral it holds for you sit outside SIPC protection.
How do I turn off stock lending?
Check whether you are enrolled first. At IBKR, end SYEP in Client Portal under Account Settings. At Robinhood, open View Stock Lending and switch it off for each account. M1 and Public clients opt out by email, and M1 re-enrolls you if you open a new account.
Does turning off stock lending stop my broker from lending my shares?
It ends the lending program, but a margin account gives your broker a separate right to lend. IBKR's client agreement covers "securities that may be held in a margin account." Robinhood's customer agreement says margin securities "may be borrowed by us, or lent to others." M1 says avoiding substitute income requires opting out and clearing any margin balance.