Frequently Asked Questions

Securities Borrowing

What are the key advantages of using SBL facilities as opposed to other short selling tools?

You can have direct access to the market which you are trading. This is unlike over-the-counter products where you will be trading against the market makers. You can have up to transaction day + 1 (sales) to put in your collateral. You will not be charged a financing fee on securities pledged as collateral. There is no maintenance fee for a SBL account.

How do I open a SBL account with Phillip Securities?

For existing clients of Phillip Securities, simply log in to POEMS 2.0 > ACCT MGMT > SBL to sign up and activate your SBL account. For potential clients of Phillip Securities, kindly approach our Trading Representatives or Phillip Investment Consultants at our Phillip Investor Centers.

Do I have to sell through Phillip Securities after I have borrowed the securities from Phillip Securities?

Not necessarily, although it is preferred. You may borrow the securities from Phillip Securities but sell them at other brokerages. However, you must communicate this to your trading representatives at both Phillip Securities and the brokerage at which you sold the securities, and our SBL Desk in order for settlement of trades to be performed.

How many times can I leverage on my capital through using Phillip Securities’ SBL facilities?

The initial margin requirement is 30% of the market value of loaned and sold securities. Hence, you can leverage up 3.33 times of your capital for short selling.

How do I perform the short trade?

There is no special platform required to sell the borrowed securities. The way of performing short trades is the same as the way you perform a normal buy / sell trade. You will sell the borrowed securities in the ready market as if you are selling your own securities. This short trade has to also be communicated to your trading representative for settlement latest by T+1 of sale.

Can I sell direct to the highest bidder (highest buyer’s price) using SBL facilities?

As you are trading in the normal market, you can have the flexibility of choosing the type of order (market order or limit order). This means that you may either sell direct to the highest bidder or queue at the price you desire.

Do I need to put in any collateral after I have sold the securities?

Yes. You will have to put in collateral latest by the day following the short sale. Accepted collateral can be in the form of cash or marginable securities as prescribed by Phillip Securities. All accepted securities will be assigned a collateralized value.

How do I compute the value of collaterals required (initial margin & maintenance margin) for the securities I borrowed?

Initial Margin = 30% of market value of loaned securities

Maintenance Margin = 130% of market value of loaned securities – (sales proceeds receivable / received + existing collaterals)

What are the securities available for borrowing?

The list of available securities and their respective quantities differ from time to time. An updated list may be obtained from your trading representatives (TR) or via POEMS Online. You may borrow such securities by logging into POEMS Online > STOCKS > SBL > SCRIP BORROWING, and instantaneous confirmation will be given. Alternatively, you may contact your TR or SBL Desk to enquire if you could not locate the securities you want.

What happens if the securities that I have sold have corporate actions such as dividend distributions, bonus issues or rights issues?

The borrower will have to protect the lender from any loss of such entitlement. Therefore, if you have sold securities which have impending corporate action entitlements, you can either choose to leave the short position open and compensate the lender for such loss of entitlement or buy back the securities and return to the lender before the ex-date of the entitlement.

What do I need to note when I intend to short sell the securities during a corporate action entitlement (dividend / bonus / rights) period but only buy back after the ex-date?

As a borrower, you will have to protect the lender from any loss of corporate action entitlements at all times. Therefore, when securities are bought back after the ex-date, you will have to reimburse the lender the same amount of corporate action entitlement as if the lender is still holding the securities.

After I have bought back the securities, do I have to return the securities?

A buy-back of securities does not automatically translate into a return of the borrowed securities. To return the borrowed securities, you must either return them via POEMS 2.0 (Acct Mgmt > SBL > Script Returning) or inform your TR of your request to return. Interest charges will be computed as follows:
  • If securities are returned on purchase due date or earlier, interest will cease to accrue on the purchase due date
  • If securities are returned after due date of purchase, interest will cease to accrue one day after the return is done

What happens if there is a recall of the loaned securities?

If you receive a notice of recall, you will have to return securities borrowed within one settlement cycle of the call. Essentially, this will mean that you will have to buy back the required securities if you have an open short position.

How is margin call computed?

A margin call will be made if the market value of the borrowed securities increases. If the increase causes your margin ratio (MR) to fall below 130% (but above 120%) of the borrowed and sold securities, your TR will inform you and you will have to satisfy the call within 2 market days. If your MR falls below 120%, you will have to satisfy the call on the day of call. Once a margin call is made, you will have to restore the required margin ratio back to 130%.

How do I satisfy a margin call?

  • Top up by cash
  • Top up by depositing marginable securities prescribed by Phillip Securities.
  • Reduce short exposure
  • Sell long positions of securities within the SBL account

Is there a maximum period I can borrow the securities?

There is no maximum period which you can borrow the securities. However, if there is a recall, you will have to return the securities within one settlement cycle of notice.

Is there a minimum period I can borrow the securities?

Once you have borrowed the securities, the earliest you can return the securities is 1 market day later.

Can I withdraw the securities borrowed?

No. Securities borrowed are not allowed to be withdrawn to other accounts. The securities borrowed will be delivered by Phillip Securities to CDP when the sale is due.

Can I withdraw the cash / securities collateral?

Yes, you may withdraw the cash / securities collateral as long as the remaining collateral is enough to satisfy the margin requirement.

What will be the charges incurred for a SBL loan?

  • Administrative Charge - S$21.40 Per Contract
  • Settlement Fee - S$0.535
  • Borrowing Fee & Varies.
  • Kindly check with your TR or our SBL Desk officer for specific rate.
Note: Charges & fees are inclusive of GST. For updated charges and fees, kindly refer to "Fee Schedule"

Are there any other relevant charges?

You will incur negative (debit) balance if your SBL account does not have sufficient funds in the settlement currency.

Currency Interest on Debit Balance
SGD6.00% p.a.
USD7.00% p.a.
HKD6.00% p.a.
CDP share transfer fee of $10.70 per counter apply for deposit / withdrawal of shares for individual direct securities account.

Note: Charges & fees are inclusive of GST.

PSPL reserves the right to change the rates without prior notice.

Do I get paid for credit cash balances?

Yes. Please refer to fee schedule for an updated rate. charges and fees, kindly refer to "Fee Schedule"

How does a SBL transaction work?

Working Example

Client borrowed 10,000 securities of ABC securities on 2 July. He bought back 10,000 of ABC securities on 4 July and returned them on 9 July. Assuming (a) borrowing fee is 6% p.a. and (b) average of closing prices between 2/7-9/7 is $5, total cost incurred for an SBL loan will be calculated as follows:

  1. Admin Fee = $21.40
  2. CDP Settlement Fee = $1.07 (buy & sell contracts)
  3. Borrowing Fee = [6% / 365days x 8 days loan x 10,000 securities x $5 (average of closing price between 2/7 - 9/7)] = $65.75
Therefore, Total cost = $21.40 + $1.07 + $65.75 = $88.22

Note: Charges & fees are inclusive of GST.

Do I need to disclose my Short Selling positions?

Under the Securities and Futures (Short Selling) Regulations 2018, investors with short positions above a specified threshold* are required to report these positions to MAS through a new online portal, the Short Position Reporting System (SPRS), with effect from 1 October 2018.

Notes:

* A short position has to be reported to MAS if it reaches or exceeds the lower of:
(a)   0.2% of total issued shares or units; or
(b)   S$2,000,000.