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.
iOCBC Share Borrowing Account
Extend your trading strategies with Share Borrowing
Benefits
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 share 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 Borrow 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
FAQs
Common questions
What is share borrowing?
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
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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