Share Financing

Financing Quantum
We provide 80% financing for ‘S’ grade securities, 70% 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 0.70, 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 * 0.70 + 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 0.70 = S$7,000
‘B’ share purchased: S$20,000 x 0.5 = S$10,000
Total collateral: S$7,000 + S$10,000 = S$17,000

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 securities traded through the Phillip Share Financing Account (both local and foreign securities) will be held in our custody.

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.

Interest payable on Singapore dollar cash deposits will be based on the following tier rates:

*The above rates will take effect 02 Mar 2009

Interest payable on the foreign currency cash deposits will be based on the following rates:

*All interest rates are subject to change without prior notice.

Multi-currency Facility

Account holders have an option to opt for Multi-currency facility. Currency deposits offered are SGD, USD, HKD and GBP.
Account holders should ensure that they have sufficient funds in the foreign currencies ledger to avoid incurring interest on debit balances. Rates on debit balances are as follows:

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 Statement
Besides being able to view your monthly transactions online, physical statements will be mailed to you if you have any transactions in that month.
To save the environment and enjoy greater convenience, you may opt to receive monthly statements by emails (E-statements) instead. To opt for E-statements, kindly follow the steps below:

1. Log in to your POEMS with your account number and password
2. Click on Stocks > acct mgmt > update particulars
3. Scroll down to < E-statement particulars>
4. Enter the email address to which you wish to receive your E-statements.
5. The monthly statement send to you will be password protected, choose the password you wish to use for your monthly statement, the password must be different from the one you use to log in to your POEMS.
6. Click on the update button.

Upon completing the steps above, monthly statements will be sent to you by email instead of physical statements.