Frequently Asked Questions
Who can participate in Securities Lending?
Anyone with a SBL account at Phillip Securities Pte Ltd can participate in Securities Lending.
- For investors whose securities are kept at the Central Depository Pte. Ltd. (CDP), you would have to transfer your securities from CDP to Phillip Securities Pte Ltd's ("Phillip Securities") custody for the securities to be lent.
- Investors with securities in custody with Phillip Securities under their Margin, Custodian and/or Prepaid account(s) will be auto-eligible for Securities Lending.
How can I participate as an eligible lender?
You will need to have an SBL account in addition to any other accounts you may have with Phillip Securities. Once you open an SBL account and agree with the terms and conditions of securities borrowing/lending, you will be able to participate as an eligible lender of securities. Do note that Phillip Securities will have to be the appointed custodian of your securities before they can be loaned out. Your securities in all your accounts with Phillip Securities will be eligible for Securities Lending.
Can I lend my securities which are bought using a CPF investment account?
Unfortunately, you cannot lend the securities which are bought using a CPF investment account through Phillip Securities.
How do I know which of my securities are eligible for lending?
All securities are eligible for lending as long as there is demand for them. You can consult the SBL Desk or your trading representative.
Will I be informed first before the loan is made?
The securities borrowing/lending agreement enables Phillip Securities to on-lend your securities with your one-time standing approval. We will not notify you prior to borrowing the securities from you. You may check your lending position by logging into POEMS Online under SBL portfolio which set out the securities lent, quantity as well as the lending rate secured.
Do I need to have a minimum quantity for each security to be eligible to lend?
There is no minimum quantity to be eligible. However, due to certain nature of some loans, it might be more effective for Phillip Securities to borrow from lenders with certain level of quantity available.
How long will my securities be lent out?
The duration varies from loan to loan. There is no fixed period which a borrower will have to borrow.
What is the lending rate I will get for lending my securities?
Lending rate varies from loan to loan. The lending rate depends on the supply, stability and size of the loan. Therefore, the rate can only be confirmed at time of loan. The lender will be entitled to the lower of 50% of the lending fee generated (subject to changes at Phillip Securities’ discretion) or the prevailing market rate for borrowing the particular securities.
How is the lending fee computed?
Lending fee is computed on a daily basis (non-compounded) and accrued to your SBL account on a monthly basis.
Per Day Lending fee = Lending Rate x Closing Price x Quantity / 365
How will the lending fee be paid?
Lending fee will be paid on a monthly basis, and credited into the lender's SBL account. You may withdraw this lending fee credited by submitting the SBL withdrawal form or contacting your trading representative to do so.
Can I sell my securities even if they are lent out?
Although you have lent out your securities, you are still entitled to the rights of a shareholder. This includes the right to sell your securities anytime.
Can I recall my loaned securities?
Although you have lent your securities, you are still entitled to the rights of a shareholder. This includes the right to recall your securities anytime. All you need to do is to inform your trading representative or our SBL Desk for any recall. Recalled securities will be returned to the shareholder within one settlement cycle.
Will I still be entitled to corporate actions such as dividends, bonus securities and rights issues?
As a lender of the securities, although there is a transfer of legal title of the securities from you to the borrower, you remain as the beneficial owner of the securities. This means that you will still be entitled to the economic benefits (such as dividends, bonus securities and rights issues) of the securities. However, you will not be entitled to any voting rights when the securities are lent. You will need to recall your securities in order to vote.
Can I use my SBL account to buy securities?
Yes. You can use your SBL account to buy securities. However, you have to ensure that funds to settle your purchases reach Phillip Securities by 10 a.m. on contract due date.
What is the risk to a lender?
One possible risk to a lender is counterparty risk. However, this risk is mitigated in the following ways:
- Lenders only look to Phillip Securities, a reputable financial institution as the borrower;
- Phillip Securities ensures that collateral is provided in favour of the lender. Where securities are on-lent, Phillip Securities collects collateral from the borrower valued at least 105% of the market value of the loan.
Do I need to notify changes in my shareholding according to the requirement in the Companies Act if I am a substantial shareholder participating in securities lending program?
With effect from 1 April 2004, substantial shareholders who take part in securities lending transactions are exempted from the substantial shareholding notification requirements under the Companies Act. However, if you are a director of the company, according to the Companies Act section 165 and 166, you will need to disclose any change in interest in your securities in the company within 2 business days after the change in interest. Do consult your professional adviser on your legal reporting obligations.
What are the tax implications of securities lending?
Lending fee is an income. As such, it is subject to tax. Dividends paid by way of manufactured dividends will also be subject to income tax treatment. You may wish to consult your tax adviser on this aspect.
Can I retain my SBL account and not participate in Securities Lending?
Yes. You may retain your SBL account for securities borrowing purposes and inform your trading representative or our SBL Desk via email that you wish to opt out as a lender. This will serve as a standing instruction that you do not wish to on-lend any of your securities custodised with Phillip Securities.