BlackRock Canada opens a securities lending program for iShares Bitcoin ETF

BlackRock Canada has confirmed that it has opened a securities lending program for the iShares Bitcoin ETF (IBIT) starting from August 25, after giving a 60-day notice to investors.

This program was announced in the prospectus on June 26, allowing the fund to conduct lending transactions under Canadian securities law, similar to many other iShares ETFs to generate additional income.

Program mechanism

• Loan funds for stocks or other securities to financial institutions, receiving collateral and loan fees.
• Collateral must be at least 102% of the market value of the loaned securities, which can be cash or securities, valued daily.
• BlackRock provides insurance against borrower default, committing to replace missing securities.
• A maximum of 50% of the fund's NAV can be lent at the same time. Cash collateral is only invested in highly liquid securities, with a maturity of ≤ 90 days.
• Supervised by an internal risk management team, using technology and quantitative models to monitor exposure.

Risks and protective measures

• The risk of borrowers delaying or failing to repay securities affects the right to participate in company events such as mergers, dividends.
• Market conditions may reduce lending activity, affecting potential revenue.
• Changes in taxes or laws may delay or reduce payments.

BlackRock emphasizes that collateral >100% and the insurance mechanism mitigate the risk of loss for investors, ensuring that the fund can recover the portfolio even if the borrower defaults.