/Margin Financing
The margin financing trading services provided by GF Securities (Hong Kong) include not only order placement, quotation and online service queries by dedictaed personnel, but also online trading services for securities financing. Our clients can check real-time quotes free of charge through their electronic accounts enabling them to understand market trends and grasp each investment opportunity.
Our company offers more than 2,000 stocks spread across a wide variety of industries. More importantly, we provide margin ratios of up to 80% of the market value of the security, allowing you to flexibly use funds to meet your investment and financial needs.
Distinguished margin clients can enjoy a special interest rate discount. The rate is calculated daily based on the balance of your margin account. Clients can buy and sell stocks at a lower cost to increase their return.
- Securities markets for margin trading:
- Hong Kong, Mainland China, and the US, and other recognized markets
- Securities Eligible for Margin Trading:
- Over 2,500 securities listed on the Hong Kong and US stock markets, and eligible securities on the Shanghai-HK/Shenzhen-HK Stock Connects
- Margin Ratio:
- 10% - 80%
- Marginable Hong Kong stocks and their margin ratios:
- Hang Seng Index (HSI) constituents: 80%
- Red chips or other large-caps and high-liquidity equities: 60-70%
- Others: 10 - 55%
- Small-caps with low liquidity, GEM, stock warrants and CBBC: 0%
- Margin Value (MV):
- Total loan amount/total collateral value of securities* x100
- Margin Call:
- A margin call will be triggered when MV is more than 100%. The client should settle the margin call within the deadline. We will send a margin call notification via SMS and email. In case the client fails to settle the margin call within the deadline specified, our company is entitled to execute a forced liquidation.
- Margin Liquidation:
- Our company will be entitled to liquidate the margin immediately without prior notice and send an SMS and email to inform the client of the forced liquidation upon completion of the liquidation if MV >= 130% or the margin call has lasted for more than three working days. In addition, our company reserves the right to compulsorily liquidate the margin in response to specific market conditions or individual stock performance criteria without prior notice.
- Margin Interest Rate:
- Margin Value Greater than Margin Loan: P** + 3%
- Margin Loan Greater than Margin Value but Not Exceeding Market Value: P** + 8%
- Margin Loan Exceeding Market Value: P** + 8%
- (Our company may adjust the margin interest rate from time to time pursuant to various circumstances and reserves the right to the final decision)
- Upgrading Service:
- Our company monitors margin accounts and will issue a warning with an SMS message to allow clients to know instantly if the MV in their account has exceeded 100%.
*Margin Value of Total Securities = Sum of (Market Value of Designated Securities× Margin Ratio of Designated Security)
**P is the prime rate of Standard Chartered Bank. Our company may adjust the rate from time to time in accordance with Standard Chartered Bank's announcements, and reserves the right to the final decision
1. When a client has cash
- A client has cash of HK$100,000
- and intends to purchase Security A, for which the margin ratio is 80%
- He can purchase Security A up to a total market value of HK$500,000 (100,000/(1 - 0.8) = 500,000)
- Therefore, if the client intends to purchase Security A with a market value of HK$1,000,000, provided the credit limit is successfully approved, the client only needs to deposit HK$200,000 to start margin trading.
- The client has a fund of HK$200,000 and our company provides a loan of HK$800,000 to the client.
2. When a client has equity
- The client owns a security eligible for margin trading of which the total market value is HK$1,000,000, margin value is HK$200,000 and margin ratio is 20% (1,000,000*20% = 200,000)
- and intends to purchase Security A, for which the margin ratio is 80%
- After the credit limit is approved,
- the client may purchase Security A with a total market value of HK$1,000,000 (200,000/(1 - 0.8) = 1,000,000)
- Thus, the total market value of securities held by the client will be HK$2,000,000, margin value of HK$1,000,000, financing amount of HK$1,000,000. (1,000,000*20%) + (1,000,000*80%)
* The examples mentioned above are provided to describe the leverage principle and are for your reference only. The actual situation still needs to be determined according to specific market conditions, stock quality, customer background and concentration.
- The credit limit may only be used in the margin account of our company and must not be withdrawn for cash or used for other purposes.
- When a margin call occurs in a client’s margin account, the client’s application for a credit limit will be rejected temporarily unless the margin call is covered.
- Our company may adjust the credit limit from time to time in response to the client's credit history, financial capacity, risk status of his/her margin loan portfolio and prevailing market conditions.
- Our company reserves the right to cancel the credit limit of a client’s account without prior notice and the debit balance in the account must be repaid in full within the specified period upon such cancellation.
- Our company may refer to credit reports on the client and his/her guarantor issued by a credit data services agency in review of the client’s application. Our company may also require the applicant to provide supporting documents with respect to additional financial status and any relevant assets. And our company is entitled to reject the application for a related credit limit if necessary documents are not provided.
- The time required for approval depends on the number of applications for financing credit and whether sufficient supporting documents have been provided by the applicant. Generally, it takes 2 to 3 working days to complete the approval.
- If the credit limit is approved, no fee will be required for the client without margin loan.
- The approval of the credit limit shall be at the sole discretion of our company. And our company reserves the right to the final decision in the case of any dispute.
Example: A client holds 1,000,000 shares of Security A of which the price is HK$2.00, total market value is HK$2,000,000, margin ratio is 50%, margin value is HK$1,000,000 (2,000,000*0.5 = 1,000,000) and the loan amount is HK$1,000,000 with a MV of 100% (1,000,000/1,000,000*100) and PV of 50% (1,000,000/2,000,000*100).
The margin call is stated as follows when the price of Security A drops by 15% to HK$1.70:
- Latest Market Value
- Latest Margin Value(1)
- Margin Loan Amount
- MV % (2)
- Margin Call amount(3)
- HK$1,700,000
- HK$850,000
- HK$1,000,000
- 118%
- HK$150,000
- (1) 1,700,000*0.5=850,000
- (2) 1,000,000/850,000*100 = 118%
- (3) 1,000,000-850,000 = 150,000
Our company will require the client to provide sufficient additional funds or securities as collateral to cover the margin call within a specified period.
The margin call is stated as follows when the price of Security A drops by 25% to HK$1.50:
- Latest Market Value
- Latest Margin Value
- Margin Loan Amount
- MV %
- Margin Call amount
- HK$1,500,000
- HK$750,000
- HK$1,000,000
- 133%
- HK$250,000
Our company is entitled to execute a forced liquidation until MV is below 100%.
The margin client must pay close attention to his/her MV and ensure it does not exceed 100%.
Please note: In the case that the margin ratio of a client’s securities holdings is 80%, PV (Total Margin Loan Value/Total Market Value) should be noted and maintained at 90% or below following a margin call.
- 1.For a margin account, our company generally charges interest as per different margin interest rates under different circumstances, namely " margin value greater than margin loan", "margin loan more than margin value but not exceeding market value" and "margin loan exceeding market value". A normal interest rate will be used for the “financing loan no more than margin value” and a higher overdraft penalty interest rate will be applicable for "financing loan more than margin value but no more than market value" and "financing loan exceeding market value".
- 2.The client may refer to the details of the margin interest rate and accrued interest in the statement for the Securities Margin Account or contact his/her Customer Service Manager for enquiry.
- 3. The overdraft penalty interest rate is applicable for any loan amount higher than the margin value of a client’s securities holding and the client must pay the overdraft interest for the excessive loan (margin call). For details of interest rates and the overdraft penalty rate, please refer to the latest fee schedule on our website.
- 4. The interest is calculated daily on the basis of a 365-day year and charged on the basis of actual days. The interest will be deducted from your account on the last business day of each month.
Example of Margin Interest Calculation
1.Margin Interest Rate: P**+3% (for value greater than margin loan amount)
- Intra-day Financing Loan × Rate ÷ 365 Days × Actual Days
- = HK$ 100,000 × 8.375% ÷ 365
- = HK$ 22.95
- This is the one-day margin interest.
2.Overdraft Penalty Rate: P**+8% (for a margin loan exceeding margin value but not exceeding market value, margin loan-exceeding market value)
- If the total margin value decreases from HK$100,000 to HK$60,000 due to a drop in the price of the securities held by our client and the intra-day margin loan of the client is HK$100,000, a margin call of HK$40,000 (=HK$100,000 - 60,000) will occur. And the client must pay an overdraft interest for the excesses mentioned above.
- HK$(20,000+20,000) × 13.375% ÷ 365 + HK$60,000 × 8.375% ÷ 365
- = HK$28.43
- The calculation method for one-day financing interest plus additional overdraft interest is stated above
**Our company may adjust the interest rate from time to time pursuant to various circumstances and reserves the right to the final decision
- 1. An account will not be available for loan applications or further securities purchases if its MV reaches or exceeds 100%.
- 2. Our company may adjust the credit limit from time to time in response to a client's credit history, financial capacity, risk status of his/her margin loan portfolio and prevailing market conditions.
- 3. A client is required to cover the margin call within the specified period in case his/her account MV exceeds 100% due to a trading suspension of his/her securities holdings.
- 4. Our company will regularly update the list of eligible equities for margin trading, margin ratios for equities, the margin call ratio and interest rates and service fees. And our company will inform clients of relevant information and arrangements by email.
- 5. Our company may require clients to provide asset proof for evaluating their suitability for margin facilities and margin trading.
- 6. Our clients are required to provide a valid mobile phone number and for receiving SMS messages to ensure that they can receive the SMS messages about margin call on time.