Earn income lending out your Taiwan shares: how the SBL market works
Last updated: 2026-08-20
Lending your long-held Taiwan shares into the securities lending (SBL) market lets you earn a fee from borrowers who need them (mostly short sellers). Three pricing methods: fixed rate (currently 3.5% p.a.), competitive bidding (up to 16% p.a.), or negotiated (also capped at 16%). Dividends are fully compensated during the loan; you keep legal ownership. Not investment advice.
Three pricing methods: fixed, competitive, negotiated
TWSE runs three lending markets. Fixed-rate: TWSE sets one rate for everyone, currently 3.5% per year. Competitive bidding: lenders and borrowers submit their own rate, capped at 16% per year in 0.1% increments — higher demand (e.g. a hot short target) pushes the matched rate up. Negotiated: the two sides freely agree on rate and terms bilaterally, still capped at 16% per year. Brokers typically take a service fee (commonly around 20%) out of the gross lending income before paying the lender.
Loan duration: 6 months, renewable twice
Each loan term runs up to 6 months, and can be extended up to two times (each extension also capped at 6 months) — so a single loan can run as long as 18 months before it must be settled and, if both sides want to continue, re-contracted.
Dividends: fully compensated, ownership unaffected
If the borrower still holds your shares on the ex-dividend/ex-rights date, you are compensated in full — cash dividends as cash, stock dividends as an equivalent share adjustment — so lending doesn't cost you the payout. The tax treatment differs by type (compensation is generally taxed as rental/other income, distinct from a normal dividend), so check with your broker or tax advisor for your specific situation.
Can you sell while your shares are on loan? Not immediately
For fixed-rate and competitive-bidding loans, you must first submit an early-recall request — notice period is one, three, or ten business days depending on the transaction type — and wait for the shares to return to your custody account before you can place a sell order. Negotiated loans let the two sides set their own recall notice period. This recall delay is the main practical risk: you can't instantly sell a stock that's currently out on loan.
Not the same as TWSE's 1-day settlement lending (交割借券)
TWSE also runs a separate, narrower mechanism called settlement/delivery lending (交割借券), used to cover settlement shortfalls — those loans run for exactly one day, cap the fee at 7%, and (unlike the general SBL market above) let the lender keep selling their position without any recall wait. If an article talks about "lending shares to earn income" it almost always means the general SBL market described on this page, not the 1-day settlement mechanism — don't mix the two up.
FAQ
What is share lending for income, in one sentence?
It's putting shares you already own into the securities lending (SBL) market so a borrower (usually a short seller) can borrow them, in exchange for a lending fee paid to you.
What are the three pricing methods and their rates?
Fixed rate: TWSE-set, currently 3.5% per year. Competitive bidding: matched between submitted rates, capped at 16% per year. Negotiated: freely agreed by both sides, also capped at 16% per year.
How long can I lend my shares for?
Up to 6 months per term, renewable up to two times (each renewal also capped at 6 months) — a maximum of 18 months total before re-contracting is required.
Can I sell my shares while they're on loan?
Not immediately. You must first submit an early-recall request (notice period of 1, 3, or 10 business days depending on the transaction type for fixed/competitive loans) and wait for the shares to return before selling.
What happens to my dividends while my shares are lent out?
You're fully compensated if the borrower holds through the ex-dividend/ex-rights date — cash dividends as cash, stock dividends as an equivalent adjustment. The compensation's tax treatment differs from a normal dividend, so confirm specifics with your broker.
Is this the same as TWSE's 交割借券 (settlement lending)?
No. Settlement lending is a separate, narrower TWSE mechanism for covering delivery shortfalls — 1-day loans only, 7% fee cap, and the lender can keep selling normally. "Earn income lending shares" almost always refers to the general SBL market on this page instead.
Not investment advice. This is a factual summary of TWSE's general securities lending (SBL) market mechanics, not a recommendation to lend, borrow, or hold any position. Tax treatment of lending income varies by situation — consult your broker or tax advisor. Source: Taiwan Stock Exchange.