Securities Borrowing & Lending

Securities Borrowing and Lending (SBL) is a facility that allows you to borrow securities in order to engage in short selling, arbitrage or hedging activities (including covering of failed trade positions).

With SBL, the lender transfer legal title of the borrowed securities to the borrower in exchange for collateral from the borrower. The borrower will in turn return the securities borrowed within a certain specified period of time or upon lender's demand.

For the average investor who wishes to participate in short selling currently, he would have to close his position on the same day or be subjected to buying in by the Singapore Exchange. With Kim Eng Securities Pte. Ltd.'s SBL facility, we allow the average investor to participate in both the upside and downside of the market, or to use alternative trading strategies.
What is Short Selling?
How does Short Selling work?
Flexible Quantum of Borrowing
Wide Range of Collateral Securities
Available Securities for Borrowing and Borrowing Periods
Maintenance Ratio
   
 
What is Short Selling?
Investors who "short sell" stocks, borrow shares to sell stocks, in hope that they can replace these shares at a lower price sometime in the future, to return to the lender. While shorting is not necessarily for every investor, short selling offers a great opportunity to profit from a bear market or decreasing stock prices.


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How does Short Selling work?
Let's say you think that company ABC has a poor outlook in the coming months. Right now the stock is trading at $25, but you see it trading much lower than this price in the future. You decide to do a short sell on this share:

Day 1: Borrowed and Short Sold 1,000 shares of stock ABC at $25
$25,000
Day 30: Bought back and Returned 1,000 shares of stock ABC at $20
$20,000
Your gross profit*
$5,000

* Excluding brokerage/commission, clearing fees, SGX trading fees, borrowing costs, and relevant GST.

Short selling can be profitable. However, the strategy can also be risky because there is no guarantee that the price of a short stock will drop. If the price goes the other way, the investor would still have to cover the short sale and pay the higher market price, which could be substantially higher than the price at which the stock was originally short sold.

At Kim Eng Securities Pte. Ltd., we offer competitive terms for our SBL Facility:

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Flexible Quantum of Borrowing
The total amount of the borrowing is up to 2 times the collateral pledged*

*Subject to the discretion of Kim Eng Securities Pte. Ltd.
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Wide Range of Collateral Securities
Cash, stock* and shares listed on the Singapore Exchange mainboard and SESDAQ will be accepted as collateral. A minimum collateral of $10,000 in cash and/or acceptable is required.

*Subject to the discretion of Kim Eng Securities Pte. Ltd.
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Available Securities for Borrowing and Borrowing Periods
We have a wide range of available securities for borrowing. Borrowing periods are negotiable, and start from a minimum of 4 market days.

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Maintenance Ratio
All borrowing of securities will be subject to the maintenance ratio which is calculated as follows:

(Value of Collateral* รท Market Value of Borrowed Shares) x 100%

*Based on last trading day's last done price or the company's valuation, whichever is lower

In the event that the maintenance ratio falls below 140%**, KE will effect a limit call for the provision of additional collateral immediately.

** If the maintenance ratio falls below 130%, the position may be bought in immediately
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Should you require any information, please contact our Margin Finance Department at:
Margin Finance Department
Kim Eng Securities Pte. Ltd.
(Member of Singapore Exchange Securities Trading Limited)

9 Temasek Boulevard #12-00 Suntec Tower Two Singapore 038989
63 Market Street #12-01 Singapore 048942

Tel: (65) 6432 1849 / (65) 6231 6773   .  Email: marginfinance@kimeng.com


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