Business Profile

Margin account is also known as margin account or cash overdraft account. Investors can use the stocks in the margin account as collateral, borrow funds to invest according to a certain proportion of the total value of the assets in the account, and improve the profitability of customers in the form of leverage. Through this service, the customer purchasing power can be instant, help customers in the rapidly changing stock market in a timely manner to make proper investment decision, grasp the opportunity to obtain a higher return on investment.

How to operate a "leveraged" transaction?

Suppose the customer buys 1000 shares of company a with cash, and the share price is HKD50, and the total payment is HKD50,000. If a client buys the stock on a margin of 60 per cent, the same number of shares can be purchased for a fee of hk $20,000. If the price of the stock rises by 10% to HKD55 and the customer successfully sells the stock at HKD55, a profit of HKD5,000 will be made without calculating the transaction fee and the stock interest. At principal HKD20 000, the return is up to 25%. By contrast, it's 1.5 times higher than the 10% return on cash purchases. However, if the stock price falls, the client's investment loss will also be magnified.

Margin charges

Margin accounts charge the same amount for stock trading as cash accounts, including but not limited to trading commissions, transaction fees, etc. If the customer USES the margin, the overdraft rate will be charged. Our company provides the annual interest rate as low as the bank's preferential interest rate P+3%. The interest is calculated daily and settled once a month according to the amount already used. P+3% is the financing borrowing rate. If the mortgable value of stocks is less than the total amount of loans, the difference will be calculated and charged according to the standard P+8%. All unsecured loans are charged at P+10% interest

1.What is the difference between a margin account and a cash account?

A cash account means that a customer has sufficient funds in his account to deduct his account when placing an order to buy or sell stocks. A margin account is a account in which a client borrows money from a broker to buy shares against equity assets in the account. Margin financing means that customers can invest more than their principal by paying a fraction of the total value of the shares they buy. As the customer borrows money from the company to buy shares, the purchased shares will be used as collateral for the loan. According to the business rules of our company, the cash account is a basic account. If the customer wants to open a deposit account, he should open a cash account first.

2.After opening a margin account, how does the customer know the margin account information (such as account number, interest rate, etc.)?

After opening the deposit account, we will send the account opening notice to the customer by email. The deposit account, period of validity (that is, period of permanent authorization) and interest rate will be specified in the account opening notification. * the system will automatically calculate purchasing power based on the asset status of the customer's account and the mortgage rate of the shares to be purchased. If you need more than hk $3 million, you can call our customer service phone to apply for adjustment.

3. The rate of mortgage on all kinds of stocks?

The equity mortgage ratio is 0-70% of its market value. The rough division is as follows:
Hang seng index component: 70%
H shares, red chips: 20-50%
Others: 10%-40% (depending on volume, market value, company background and company finance)
Warrants and bear certificates: 0%
Our company will make regular adjustment according to the market situation. Customers can check the mortgage rate of the stocks they have bought in the TDS trading software.

4.How to calculate the interest of financing loan?

When the customer USES the financing limit, our company will charge a certain amount of interest to the customer.
1) when the customer USES the financing limit and the loan amount is lower than the mortgable value of the stock, our company will charge the customer P+3% interest. If the client raises hkd1 million and USES it for 20 days, the interest will be paid: 1 million times (P+3%) /365 times 20. Interest will be charged at the end of each month.
* P is the bank's optimal interest rate.
2) when the customer's loan is higher than the mortgageable value of the stock, our company will charge the customer P+8% interest.

5.Under what circumstances will the customer be required to collect the deposit?

When the total loan of the customer exceeds the amount of stock financing approved by the account, that is, the account financing ratio is more than 100%, our company will collect the margin from the customer to reduce the financing debt.

6.Under what circumstances will the account be closed?

Customers who do not deposit before the deadline with the deposit or to provide more collateral, and the account funding ratio reaches a certain ratio, we have the right to compulsory selling part or all of the shares in the account, in order to reduce the balance of accounts.

7.Margin business risk tips.

The risk of losses from placing collateral to finance a transaction can be significant. Your loss may exceed the collateral (including cash and any other assets) you hold in our company. Customers may also be asked to cover positions in a short period of time. If cannot perform, our company has the possibility to carry out the compulsory liquidation, the customer needs to be responsible for the generation of any arrears and interest. Therefore, the client should carefully consider whether this financing arrangement is suitable for you according to their financial status and investment objectives.