Share Borrowing Account

Extend your trading strategies with Share Borrowing

Why you will love this

Engage in trading strategies such as shorting and hedging

Be able to cover your position if you accidentally short-sell

Who can apply

Age 21 and above

Must also have a Basic Trading Account

For local application

Apply at a branch with these supporting documents 

  1. For Singaporeans and Permanent Residents:

    • NRIC/SAF/SPF ID and Passport

    For Malaysians:

    • IC and Singapore Residence Pass (e.g. Employment pass) if applicable

    For Foreigners:

    • Valid Passport and Singapore Residence Pass (e.g. Employment pass) if applicable

    Note: Bring the originals of these Identification Documents (ID)

  2. Provide us with the original or electronic copy of any of the following documents reflecting your name and address:

    • Bank statement from a Monetary Authority of Singapore (MAS) licensed bank
    • Latest CPF statement
    • Latest Notice of tax assessment from IRAS

    Note: Document(s) must be dated no older than 3 months from date of application. If your mailing address is different from your residential address, please provide one document for each address.
    If you are applying for a corporate account, please call us at 1800 338 8688

For overseas application

Mail in the completed application forms with copies of:  

  1. Required for all:

    Optional Forms

  2. Provide a copy of your identification:

    For Singaporeans and Permanent Residents:

    • NRIC/SAF/SPF ID and Passport

    For Malaysians:

    • IC and Singapore Residence Pass (e.g. Employment pass) if applicable

    For Foreigners:

    • Valid Passport and Singapore Residence Pass (e.g. Employment pass) if applicable

    Bring your original ID, the photocopy and our account application form to any of the below authorised parties to witness your signature on the form and certify true copy of your ID:

    • Notary Public
    • Advocates & Solicitors
    • Singapore Embassy

    The witnessing officer should provide his/her name and contact details.

  3. Provide us with the original or electronic copy of any of the following documents reflecting your name and address:

    • Bank statement from a Monetary Authority of Singapore (MAS) licensed bank
    • Latest CPF statement
    • Latest Notice of tax assessment from IRAS

    Note: Document(s) must be dated no older than 3 months from date of application. If your mailing address is different from your residential address, please provide one document for each address.

  4. Mail it to us

    OCBC Securities Private Limited
    18 Church Street #01-00,
    OCBC Centre South,
    Singapore 049479

Benefits

Capture opportunities in a bear market

When you spot bearish trends and expect the price of a certain stock to fall in the near future, having a Share Borrowing account lets you take advantage of the falling price by borrowing shares to sell first then buying them back later at a target price.

Have a failcover if you accidentally short sell

Shorting is a planned strategy but sometimes traders may accidentally oversell their shares, ie. they sell a greater quantity of a stock than what is available in their portfolio and will be subjected to a buy-in by the exchange. 

Having a Share Borrowing account potentially helps you avoid buy-ins as you can simply borrow shares from us to cover your short position.

Trading strategies

Shorting

Engage in directional shorting if you hold a bearish view of a market or share.

Arbitrage

You can arbitrage if you see a mispricing between the underlying shares and its derivatives.

Hedging

Hedge if you wish to lock in safe price in anticipation of the securities you will receive due to bonus or rights issues.

Pairs trading

You can pair trade if you notice a divergence in two similar and correlated shares.
Borrowing Fee

The borrowing fees are accrued (but not compounded) on a daily basis and collected from you monthly.

Here is how they are calculated:

Borrowing fee = Market Value X Borrowing Rate

where

Market Value = Last Done Price X Quantity Borrowed

How much collateral do you need?
Borrow Limit 2 times of cash  Up to 2 times of shares
Value of cash/collateral S$5,000 The valuation of the collateral may differ across different stocks. Assuming final valuation is $5000
Value of share borrowed S$10,000 S$10,000 (up to 2 times)
Margin percentage

(S$10,000 + S$5,000) ÷ S$10,000

(S$10,000 + S$5,000) ÷ S$10,000

What happens when there is a margin call?
If Margin Ratio falls  What happens
Between 140%-150% There will be no margin call but no new shares can be borrowed until the margin percentage is restored
Between 130%-140% Margin call to restore the margin percentage in 3 days' time
Below 130% Margin call to restore the margin percentage in 1 day's time
How to Borrow

Step 1

Find out what you can borrow

Check the availability of the stock you want to borrow before shorting. Index components are generally more readily available while smaller cap stocks are limited.

Step 2

Fulfil collateral requirements to get your loan approved

Ensure sufficient collateral (cash or shares) is available in your account before shorting.

Step 3

Sell your borrowed shares

If you are selling your borrowed shares, mark the order as “short-sell” on your trade ticket.

Step 4

Return the shares

Buy back the shares when it reaches your target price and return them to us
Before you apply

Eligibility requirements

Minimum age

Age 21 and above


Disclaimers

Risk warning for Securities Borrowing
Borrowing to finance the trading of securities (leveraging/gearing) or to cover your short selling activities carries a high degree of risk. If the value of the collaterals fluctuates substantially, falling below the maintenance margin requirement, you may be called upon to deposit substantial additional funds on short notice in order to maintain your position. If you fail to comply with a request for additional funds or reduce your loan within the specified time, your position may be liquidated at a loss and you will be liable for any resulting deficit in your account.


FAQs
Common questions
What is share borrowing?
Share borrowing is a loan of securities to a trader who will use the borrowed shares to sell in the ready market. Later, when your target price of the stock has been reached, you buy the shares back and return the borrowed stocks.

Traders typically engage in this strategy when they expect the price of a certain stock to fall in the near future and would like to take advantage of the falling price. If their prediction is correct, the difference between the initial higher selling price and the lower buying price will be the profit.
Where are the shares borrowed from?

When you hold a share borrowing account with us, this gives you the access to borrow shares from us. Generally, index components are readily available for borrowing while smaller cap stocks are limited but the list of securities and their respective quantity available for borrowing may differ from time to time. You can get an update on the latest information from your Trading Representative (TR). ​

What is the borrowing fee?
The borrowing fees are accrued  (but not compounded) on a daily basis and collected from you monthly. Here is how they are calculated:

Borrowing fee = Market Value X Borrowing Rate (The borrowing rate is 7.77% per annum, subject to GST.)

where 

Market Value = Last Done Price x Quantity Borrowed
How much collateral do you need?

Our borrowing is leveraged, meaning you can borrow more than your pledged collateral amount. Here is how you calculate the borrowing limit based on the amount and type of collateral:

Borrow Limit 2 times of cash Up to 2 times of shares
Value of cash/collateral S$5,000 The valuation of the collateral may differ across different stocks. Assuming final valuation is $5000
Value of share
borrowed
S$10,000 S$10,000 (up to 2 times)
Margin percentage Total collateral/shares borrowed = 
150%
(S$10,000+S$5000)÷ S$10,000
Total share value/shares borrowed = 150%
(S$10,000+S$5000)÷ S$10,000
What is the borrowing rate?
Borrowing rates differ according to the stocks borrowed. Please check with your Trading Representative on the different borrowing rates.
How to apply

Open a Share Borrowing account today

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