Calculation of margin facility is based on the "total marginable value" of collateral, the maximum facility amount shall be the lower of "total marginable value" of collateral and the margin limit granted. For example, if a client holds 200,000 shares of securities "A" and applies for margin financing, the margin facility will be calculated as follows:

Number of shares of securities "A":         200,000 shares
Market price of securities "A":                  HK$20 per share
Total value of securities:                           HK$4,000,000
Margin ratio of securities "A":                  40%
Total margin value of securities:              HK$4,000,000 x 40% = HK$1,600,000

The facility amount granted to the client upon approval is HK$1,600,000, and the client can use such amount as upper limit for acquiring more securities.

(For details, please click here to refer to section 7 of our "Agreement for Securities Margin Trading")

If the price of securities drops or margin ratio of a particular security is lowered, the facility amount borrowed by the client may be higher than the total margin value of securities, which results in "margin call" on the client's account.

Scenario 1: If the margin limit of HK$1.6 million has been fully utilised and the total margin value of securities has increased significantly, client may contact us to further increase the margin limit, and enjoy a larger standby facility limit

Scenario 2: If the margin limit of HK$1.6 million has been fully utilised and the value of the securities in the account has dropped, resulting in a decrease in the total value of securities, settlement of margin call will be triggered. For example, if the "total margin value of securities" has dropped to HK$1.2 million, client has to settle margin call of HK$400,000.

Under normal circumstances, we will notify clients  via SMS or email to immediately deposit sufficient funds or specified securities to settle the balance of the loan. If the margin call situation is severe, we have the rights to force liquidate securities in the client's account.

We conduct regular reviews on the margin financing accounts and will inform clients of any adjustment to their margin limits by email.

The securities that we accept as collateral include but are not limited to Hong Kong stocks, A shares under Shanghai-Hong Kong Connect and Shenzhen-Hong Kong Connect, B shares and selected US stocks. Please contact account executive for details.

Margin interest is calculated on a "daily basis" and payable at the end of each month. At present, interest rate for margin financing is divided into two types: "fixed interest rate" and "progressive interest rate". The "progressive interest rate" will be the default interest rate calculation for newly opened margin accounts. If client needs to switch to "fixed interest rate", please check with account executive.

1. "Fixed interest rate" shall be "Prime Rate +3%" or composite interest rate at 8% per annum, whichever is higher. At present, the market prevailing prime rate is 5%, we will inform you of the change in prime rate (if any) in due course.

2. "Progressive interest rate" is the interest rate of financing on different stocks collateral based on their risk assessments. Client's aggregate interest rate is based on the graded interest rate of his/her/its stocks collateral, listed from low to high, and computed on each grade.

For example, a client with facility of HK$1.5 million and investment portfolio as listed below, according to the "Progressive interest rate" computation, the client's daily interest is about HK$258.
 

3. At present, the "Progressive interest rate" can be as low as prime rate of Hong Kong stocks financing - 3%, and that for Shanghai-Hong Kong Connect, Shenzhen-Hong Kong Connect and part of US stocks are its prime rate + 1%. For details of the stocks which are eligible for progressive interest rate in margin financing, please contact account executive.

4.If the client's outstanding balance exceeds the margin limit granted by us, the portion of outstanding balance that exceeded the margin limit will be changed with punitive interest according to the prevailing market prime rate plus 5 % or interest rate determined by us at our discretion.

Terms and Conditions:
Progressive interest rate on particular stock is determined according to our risk assessment on different collaterals. The aggregated interest rate of a client will be computed, from low to high, according to the progressive interest rate of its stock collaterals. Preferred ETF (for example 2800, 2822, 2823, 3188) may enjoy interest rate at prime - 3%; preferred quality stocks and index composite stocks could enjoy interest rates at prime - 1.25% and prime + 1.00% respectively; other stocks would be computed at an interest rate of prime + 3%, the final interest rate will be adjusted according to market interest rate changes, for more details please contact your account executive.

We reserve the right to adjust the interest rate at any time.

This privilege is not to be used together with other privileges at the same time, we reserve the rights to amend and suspend such privileges and to revise any terms and conditions without prior notice. In case of any dispute, we reserve the right of final decision.

Risk disclosure: This service and privilege shall not be regarded or constituted as any suggestion or recommendation to any person concerning any of the above investment products or items by us. Investment involves risks, and the price of securities fluctuates, sometimes dramatically. The price of a security may move up or down and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying and selling securities. There are risks in authorizing GTJAS by margin financing client to deposit securities as collateral for loans or advances made to or repaying indebtedness for or fulfilling settlement obligation of the margin financing client.

1. he risk of loss in depositing collateral to obtain financing for trading may be substantial. Client may suffer loss that exceeds the cash collateral deposited with the relevant securities company and any other assets.

2. Market conditions may cause the exercise of alternative instructions for buy and sell, such as "Stop-loss order" or "Limit order", not exercisable.

3. According to the conditions of market fluctuation, clients may be required to deposit additional funds for margin or pay interest in a short period of time.

4. If client fails to pay the required margin or interest within the specified time, the collateral of the client may be liquidated without his/her/its consent.

5. Client shall be responsible for any outstanding debts and payable interest accrued in the client's account.

6. Clients should consider carefully whether such financing arrangement is suitable for them according to their financial conditions and investment objectives.

1. There is a risk if client provides us with an authority to apply client's securities or securities collateral pursuant to a securities borrowing and lending agreement, re-pledge his/her/its securities collateral for financial accommodation or deposit his/her/its securities collateral as collateral for the discharge and satisfaction of his/her/its settlement obligations and liabilities.

2. If client's securities or securities collateral are received or held by him/her/it in Hong Kong, the above arrangement is allowed only if the client gives consent in writing.  Moreover, unless the client is a professional investor, his/her/its authority must specify the period for which it is current and be limited to not more than 12 months.  If the client is a professional investor, these restrictions do not apply.

3. Additionally, client's authority may be deemed to be renewed (i.e. without his/her/its written consent) if securities company issues the client a reminder at least 14 days prior to the expiry of the authority, and the client does not object to such deemed renewal before the expiry date of the then existing authority.

4. The client is not required by any law to sign these authorities.  But an authority is required by securities company, for example, to facilitate margin lending to the client or to allow client's securities or securities collateral to be lent to or deposited as collateral with third parties.  The securities company should explain to the client the purposes for which one of these authorities is to be used.

5. If the client signs one of these authorities and his/her/its securities collateral are lent to or deposited with third parties, those third parties will have a lien or charge on the client's securities collateral.  Although the securities company is responsible to the client for securities or securities collateral lent or deposited under the client's authority, a default by it could result in the loss of client's securities or securities collateral.

6. A cash account not involving securities borrowing and lending is available from securities company. If the client does not require margin facilities or does not wish his/her/its securities or securities collateral to be lent or pledged, the client should not sign the above authorities and should ask to open this type of cash account.