Securities Borrowing & Lending

Why Phillip Securities Borrowing and Lending?

  • More than 15 years of experience
  • Ease of viewing & trading through POEMS
  • Personalised help from your designated trading representative, if you need

What is SBL?

Securities borrowing and lending (SBL) is a temporary loan of securities between the lender and the borrower. This is done to allow the borrower who expects the price of a stock to fall to hold a short position for a longer duration, while the lender who loans the stock receives a lending fee from the borrower.

SBL is an important activity in many markets as it provides greater liquidity, tighter spreads, better risk management and possibly reduces the cost of capital.

Why Participate in SBL?

Benefits of Securities Lending
  • Potentially enhances yield of your portfolio
  • No minimum lock-in period
  • No disruption to trading activities
  • Hassle free lending arrangements
Benefits of Securities Borrowing
  • Wide variety of stocks available
  • Ease of borrowing
  • No upfront deposit required
  • Ability to sell through other brokerages
  • Potential tool to cover error trade
  • No financing fee

Mechanics

For trading convenience, you may execute your trades through your ordinary securities trading account. However, your short-sell and buy-back trades must be communicated to the Trading Representative (TR) for settlement through the SBL account on the same day when the trade is done.

Contracts (short sell & buy back) should be settled through your SBL Account so that borrowed securities will be delivered on the due date of the sell contract.

Collateral must be deposited latest by the following day of the short sell trade.

The initial and maintenance margin ratio (MR) must be maintained above 130% of the market value of the borrowed and sold securities at all times.

The list of available securities and their respective quantity available for borrowing may differ from time to time. An updated list may be obtained from your TR or by logging into POEMS online.

You may borrow the securities online through POEMS or alternatively, you may contact your TR or SBL Desk to borrow and confirm the status of your loan request.

When you buy-back the securities you do not automatically return the borrowed securities. To return the borrowed securities, you must either return them via POEMS Online (STOCKS > 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 two days after the return is done

Margin Ratio (MR) = Total Market Value of Collateral* / Total Market Value of Borrowed & Sold Securities

Collateral includes:

  1. Sales proceeds from short-sell trades
  2. Cash pledged into SBL account
  3. Securities pledged into SBL account
You may want to note that only securities prescribed by Phillip Securities Pte. Ltd will be accepted as collateral and these acceptable securities will be assigned a collateralized value.

A margin call will be made if the market value of the borrowed and sold securities increases.

If the increase causes your margin ratio to fall below 130% (but above 120%), you will be informed through your Trading Representative (TR) and you will have to satisfy the margin call within 2 market days.

If the margin ratio drops below 120%, you will have to satisfy the call on the same day to restore the margin ratio to 130% of the borrowed and sold securities.

Fee Schedule

Description Charges (inclusive of GST)
Administrative Charge SGD $21.40 per loan initiated
Borrowing Rate Borrowing rate varies between different securities
Kindly contact your TR or SBL Desk for more information
Lending Rate Lending rate varies between different securities
Kindly contact your TR or SBL Desk for more information
Contract Settlement $0.535 per contract
Negative (Debit) Cash Ledger Interest 6.0% per annum
Positive (Credit) Cash Ledger Interest 0.10% per annum for balances above S$50,000
Share Transfer(Deposition or withdrawal) $10.70 per counter onwards (to/from CDP direct account)
Account Closure $1.07 will be levied for account closure with credit balance of S$1.00 or below
Lending Fee

Lending fee is computed on a daily basis (non-compounded) and will be accrued to your SBL account on a monthly basis, where:

Lending fee per day = Lending Rate / 365 days x Last Done Closing Price x Quantity

Borrowing Cost

Cost of borrowing typically includes (1) administrative charge, (2) borrowing fee and (3) contract settlement fee. Borrowing fee is computed on a daily basis (non-compounded) where:

Borrowing fee per day = Borrowing Rate / 365 days x Last Done Closing Price x Quantity

Margin Ratio

Margin Ratio (MR) = Total Market Value of Collateral* / Total Market Value of Borrowed & Sold Securities

MR must be maintained above 130% of the market value of the borrowed and sold securities at all times.
*Collateral includes:

  1. Sales proceeds from short-sell trades
  2. Cash pledged into SBL account
  3. Securities pledged into SBL account

In summary:

  • Top up within 2 days
    120% < MR < 130%

  • Top up immediately
    MR < 120%

How can I sign up for SBL?

For existing clients with POEMS online access, log on to POEMS 2.0 – Account Management – SBL – Submit SBL Account Opening Form and Onlend Consent.

Download SBL Account Opening Form here.

Alternatively, visit any Phillip Investor Center or contact your trading representative to open a SBL account.

Risk Disclosure

Securities Borrowing

When Customer borrows securities from PSPL, the Customer will be required to deposit a required level of collateral. The Customer may be called upon at short notice to place additional deposits if the level of collateral is inadequate in relation to the market value of borrowed securities. If the required deposit is not made within the prescribed time, PSPL may buy-back the borrowed securities without prior notice to the Customer. In addition, we also acknowledge that for any and all collateral we provide will be title transferred to PSPL as provided in subsection 3(a) of Section 6 of the Conditions Governing Phillip Securities Trading Account and we will have no proprietary right to such collateral as against Phillip Securities Pte Ltd but only an unsecured debt obligation against PSPL for the value against PSPL for the value of the collateral following the title transfer.

Securities Lending

When the Customer lends securities to PSPL, the Customer temporarily loses legal ownership rights to the securities but in place, has the right to claim equivalent securities. In so far as the Customer receives manufactured dividends, the Customer may be required to treat the entire amount as income for tax purposes