Alpaca Expands Broker API with Securities Lending Feature, Enhancing Passive Income Opportunities for Retail Investors

Alpaca, a brokerage platform specializing in APIs for stock and crypto trading, has introduced a securities lending feature via its Broker API. This launch, led by CEO Yoshi Yokokawa, enhances passive yield opportunities for clients by allowing the lending of fully paid stocks and ETFs. The development in securities lending signals Alpaca's commitment to democratizing financial opportunities for traders and could boost market liquidity and passive income for retail investors.

Alpaca, an API-first stock and crypto brokerage platform, has introduced a significant new feature: Fully Paid Securities Lending (FPSL) via its Broker API. This initiative, announced by CEO Yoshi Yokokawa, offers investors the opportunity to earn passive income from their securities holdings by lending fully paid stocks and ETFs to Alpaca [1].

The FPSL program allows investors to lend securities they own outright without margin loans to Alpaca, which then lends them to other market participants, such as short sellers. In return, lenders earn interest based on the demand for the loaned securities, credited monthly to their accounts. This mechanism supports market liquidity by facilitating short selling while enabling investors to retain ownership of their assets, benefiting from potential appreciation and dividends [1].

The program is designed to be seamless, with fintech partners able to integrate FPSL into their platforms via the Broker API. This integration offers a frictionless experience for end-users and presents a worthwhile value proposition for fintech companies. By embedding securities lending into their apps, partners can generate additional revenue through a revenue-sharing model with Alpaca, diversifying beyond traditional income sources like payment for order flow (PFOF) or margin interest [1].

The FPSL program comes with risks that Alpaca transparently outlines. There’s no guarantee that all eligible securities will be lent, as demand depends on market conditions. Lenders temporarily lose voting rights on loaned shares, which could impact those keen on corporate governance. Additionally, while Alpaca mitigates counterparty risk by holding collateral (currently cash at BMO bank) and offers SIPC protection up to $500,000 (plus excess coverage up to $30 million), a broker bankruptcy could pose challenges [1].

Alpaca’s FPSL launch reflects its broader vision of building a global standard for investment infrastructure. Since becoming a fully self-clearing broker-dealer in 2024, Alpaca has quadrupled trading volume and tripled assets under custody, fueled by innovations like options trading and international expansion [1].

By combining accessibility, automation, and regulatory compliance, Alpaca continues to enhance how fintech platforms connect users to the U.S. capital markets, paving the way for a more inclusive financial ecosystem.

References:
[1] https://www.crowdfundinsider.com/2025/05/239610-alpaca-launches-securities-lending-for-broker-api/