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Securities Borrowing and Lending

50 Lots! That's really a lot. Unless you're lending out penny stocks, this will be out of reach for most retail players.

 

I personally feel that 50 lots is quite a lot (depending on what counters la), and this is equalevant to marriage deal liao lor... (min. 50 lots of securities or $150k worth of securities then one can qualify for marriage deal.)

 

wow.. 50lots minimum?  i dont have le...

Thanks everyone for the info and valuable comments.

 

Hi tiandi,

 

Thanks for checking it out and sharing it here at SJ. Very valuable indeed.

Have a nice day! 

 

According to what I "apprehend", supposedly you "lend" out X amount of XYZ shares at $1.00. If borrower of your script "shorted" your shares or there a crash or a correction and resulted in, let say, $0.90, then this will have 2 implications- Firstly, the interest that you will receive will be affected (closing price of the day is calculated), secondly if you will to sell your shares at $0.90, you will incur a loss of more that 4%. If the above assumptions of mine are correct, then it not really worth it to lend your shares unless one can determine that the shares that they lend out will forever be on a bull run or at least stay above the original price that one bought.

 

I called CDP to enquire. The line is so busy I hold for very long .. must have patience.. after three tries I got thru..


Basically you need to have 50K units of share  miminum to qualify, that rules out invvestors with small numbers of lots.


A list of 192 stocks are eligible. this list is in http://www.cdp.com.sg/user/lend_eligible.pdf 

You get annual return of 4%.

You can view : How Does SGX Securities Lending Work?on this link :  http://www.cdp.com.sg/business/lend_how.html#

Risk is found on FAQ:   http://www.cdp.com.sg/faq/lend_faq10.html
Are there risks involved?
Yes. There is the counterparty risk of CDP, who acts as counterparty to both lenders and borrowers, in not fulfilling its obligation of returning the loaned securities. However, this risk is mitigated as CDP is a wholly-owned subsidiary of Singapore Exchange Limited, which is regulated and well capitalised.

also there are article about this SBL , i think they explain on risk with LENDER :  http://www.cdp.com.sg/business/lend_info.html

if you need more information, you can type SBL in CDP's website to search..

 

Looks good... what's the catch?

 

There's no such thing as a free lunch.

 

Come across this in SGX website...

http://info.sgx.com/SGXWeb_CORPCOM.nsf/NEWDOCNAME/Securities_Borrowing_and_Lending?OpenDocument&sidenav=prodsecurities

Any comments? any forumers had also applied for this? is there any cons?