By Sam Boughedda
Investing.com -- Robinhood Markets (NASDAQ:HOOD) announced Wednesday in a blog post that it will enable stock lending on its platform.
The company will roll out the feature, allowing users to lend stocks to borrowers Robinhood finds.
“Our version of Stock Lending empowers customers to put their investments to work while keeping it simple,” said Steve Quirk, Chief Brokerage Officer at Robinhood.
“Robinhood does the work of finding borrowers and managing transactions while customers can add a potential source of passive recurring income to their portfolio,” Quirk added.
Robinhood users can permit the broker to lend out fully paid stocks in their portfolio, Robinhood will then find interested borrowers, and its customers will get paid when there’s a match.
The feature is expected to be available to customers by the end of May.
However, the company warned that there are risks, and stock lending isn't for everyone.
"There is a risk that Robinhood Securities could default on its obligations to you under the Stock Lending Program and fail to return the securities it has borrowed. If Robinhood Securities defaults and is unable to return loaned securities, you will not be able to trade such securities as usual," the brokerage stated.
Robinhood stock is up 3.5% Wednesday.