Share Financing Account (V)
Financing Quantum
We provide 80% financing for ‘S’ grade securities, 71% financing for ‘A’ grade securities and 50% financing for ‘B’ grade securities. Securities graded as ‘C’ will not be marginable. The list of marginable securities will be made available to you when your Share Financing account is approved.
Margin Requirement
Margin ratio = Ledger / Collateral
Margin ratio must always be less than 100%.
Collateral refers to the value of securities held in the account after accounting for all outstanding sell trades. To obtain the collateral value of the securities, the value of ‘S’ securities will be multiplied by a price factor of 0.80, the value of ‘A’ securities will be multiplied by a price factor of 0.71, and ‘B’ securities multiplied by a price factor of 0.50.
Collateral Value = Market Value of ‘S’ securities * 0.80 + Market Value of ‘A’ securities * 0.71 + Market Value of ‘B’ securities * 0.50
Ledger refers to the amount of loan utilized.
Example:
A customer deposits S$10,000 cash and S$10,000 worth of ‘A’ securities, and buys S$20,000 worth of ‘B’ securities. Assuming that the market prices remain stable.
Collateral:
‘A’ share deposited: S$10,000 x 0.71 = S$7,100
‘B’ share purchased: S$20,000 x 0.5 = S$10,000
Total collateral: S$7,100 + S$10,000 = S$17,100
Ledger:
Cash deposit: -S$10,000 (reduces the ledger amount)
‘B’ share purchased: S$20,000 (increases the ledger amount)
Total ledger: -S$10,000 + S$20,000 = S$10,000
Margin ratio = Ledger / Collateral
= S$10,000 / S$17,000
= 59 % (ratio is within limit)
Margin Calls
A margin call occurs when margin ratio ≥ 100%. If 100% ≤ margin ratio <110%, you have 5 market days including the day of notice to reduce the margin ratio to below 100%
If the margin ratio rises to or above 110%, you have to restore the margin ratio to below 100% on the same day of notice before 3 p.m.
Methods of meeting margin call:
– Depositing cash
– Depositing securities
– Liquidating securities
Custody of Securities
All shares deposited or transacted through the Phillip Share Financing Account will be held in our custody, except for purchases funded using CPF/SRS monies.
Settlement
All securities transacted through the Phillip Share Financing Account will be settled in the account. Therefore, all share purchases and subsequent sales must be conducted through this account.
As long as there are sufficient funds (in SGD equivalent) in the share financing account, you enjoy automatic trade settlement.
Clients with multi-currency ledgers may settle their foreign currency denominated trades in the traded currency or in SGD.
For non multi-currency account holders, trades will be settled in SGD.
Fund Deposition
Payment for outstanding purchases must be received on or by due date +1 unless there are sufficient collateral to finance the purchase.
Excess Funds
Idle funds residing in share financing account will be automatically deposited into an interest bearing account. However, interest will only be paid on the dollar in excess of stipulated amount. Interest income will only be credited if the monthly accumulated interest income is greater than $1.
Multi-currency Facility
Account holders have an option to opt for Multi-currency facility.
Account holders should ensure that they have sufficient funds in the foreign currencies ledger to avoid incurring interest on debit balances. Please refer to our Infosheet on the applicable debit interest rates.
Withdrawal
Sale proceeds and contra gains will be credited into the share financing account. The amount that may be withdrawn is based on the Available Cash. Withdrawals in excess of credit balances will be considered as a loan.
Monthly Statements
There are 2 types of statements sent to you:
- Statement reflecting monthly transaction movements and balance in the trading account
- Statement of transaction for equity trading (if there are any trades done)
If there is no transaction done in the trading account, a quarterly statement will be issued instead.
You may also view your current and previous month’s transaction history and account details up to 12 months year-to-date through POEMS.
Enroll in eStatements today to enjoy greater convenience of viewing your statements on the go and save the environment! Click here to find out more.
