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 = $20
  2. CDP Settlement Fee = $0.70 (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 = $20 + $0.70 + $65.75 = $86.45

Note: Charges & fees are before GST.

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