Platinum Global Bridging Finance provides securities lending and securities financing funding through their close links to stock lending companies we have developed close relationships with. We can offer various investment and loan structures to release monies from your existing portfolio in as little as 3 to 7 days. We mainly use off market private lending institutions with access to capital from investment funds and high net worth lending pools not available on the open lending market. Our lenders range from Banks, Investment Banks, Private Family Offices, Financial Institutions, Private Institutions, Asset Managers, Hedge Fund Lenders, Specialist Stock Lenders all the way through to High Net Worth Private Individuals that can take a specialist view upon low volume traded stocks. With our diverse lenders being based around the globe such as Europe, Australia, South America, South Africa, Hong Kong, Malaysia, Thailand, Philippines, Singapore, USA, and Asia. We cover nearly all lending markets globally and can secure the best lending terms for our stock lending clients. We cover securities margin loans, stock margin loans, non recourse stock loans, share pledges and also repos (share repurchase agreements) and our lenders can also look to loan against tradeable bonds and other stock market tradable instruments. If your financial product has an identifiable International Securities Identification Number (ISIN) code we can look for lending terms for you from our range of lenders. Stock loans are also known as SBL’s / securities based loans or securities backed loans in the financial stock loan lending business. We help companies release equity via public stock loans, private stock loans, single stock loans, publicly traded stock loans, public exchange traded stock loans and stock loans that are publicly exchange traded.
Multiple Benefits of Stock Loans
- Obtain Liquidity Fast
- Protect yourself from market volatility
- Simple, fixed interest rates from 2.5%
- Non-recourse loans and margin loans
- Fast, easy and transparent Process
- No upfront or hidden fees. Fees deducted from stock loan proceeds
- No credit checks
- 100% Privacy Guarantee
- Flexibility in the use of your money
- Competitive Loan to Values. From 45% up to 80% LTV
- Quick closing and Funding within 10 days or less
- Can loan on recent IPO stock issues no problem
- Loans available on OTC stocks, OTCQX, OTCQB, OTC Bulletin Board OTCBB and OTC Pink Sheet markets.
- We have buyers ready for OTC listed stocks, OTCQX, OTCQB, OTC Bulletin Board OTCBB and OTC Pink Sheet markets
- Our lenders offer stock loans with rehypothecation and non rehypothecation offering the client more stock loan options
What Is Securities Financing and Stock Loans
We help with capitalization through the release of a portfolio investment such as a stock loan, or other liquidity funding such as a stock financing transaction allows owners of publicly traded stock the flexibility to gain access to the locked up value of their freely traded stock position. The stock transaction program is designed specifically for corporations, its employees, officers and major holders of publicly traded companies while providing total privacy to our clients. Our goal is to help you obtain the best financing structures possible in today’s marketplace. If you’ve never considered stock loans, share financing, or the unique proprietary forms of capitalization that will put liquidity in your pocket, we can help you understand how your liquidity options work with a pledged share plan.
We always go the extra mile to get you the best rates, lowest fees, and terms you deserve for your securities borrowing and lending.
How Long Does It Take For Stock Lending?
Our unique position with links to a number of securities lenders providers means we collaborate with owners of publicly traded stock on the terms of each and every stock lending financing transaction. Our process is quick, transparent and completely confidential. Financing proceeds can be used for personal or business purposes, or to diversify or hedge current stock positions. Funding is quick with a transaction closing in as little as 3 to 7 business days. Same day funding is available contact us to find out more.
What Are the Stock Borrowing Amounts?
We can provide non recourse stock loans from $500,000 to $2bn USD through our network of private institutions. We do require the stocks being refinanced to have a minimum turnover but we do work with several securities financing houses that offer the lowest stock turnover in the business.
Terms of providing you with liquidity and funding are based on evaluation of the risk and future performance associated with the securities involved in the transaction. The term of the transaction is typically three years, with Interest payments or Maintenance Fees on quarterly or semi-annual bases. Our stock financing and provision of liquidity are interest only, or accompanied by modest Maintenance Fees, and additionally, are non-recourse. The recipient of funding has the option of simply walking away at any time with no further liability and no personal or corporate guarantees.
In the event of a default, our stocks and securities lenders do not report to any credit bureaus or governmental agencies, nor do we file any public notice. There is no adverse consequence to the client’s credit.
Due to the unique tax and legal issues involved with transactions involving publicly traded stock, anyone considering alternative financing should consult both tax and legal counsel.
Many people ask what are securities in finance? Securities in finance are essential so investors can access the stock market and invest for the longer term while hoping they can make a profit from their stocks rising. Its important to have an investment plan and portfolio risk assessment so that you have a target to aim for.
Stock Funding Process
- Capital Recipient (or “client”) submits inquiry for funding by providing a stock symbol or stock code and target transaction amount.
- We determine the viability of the transaction, and calculates a maximum transaction amount, relative to the value of the stock and an interest rate, or Maintenance Fee, based on an assessment of both short and long term risks.
- We issue a term sheet to client to review.
- Terms are negotiated and finalized.
- We send contract documents to client for review.
- Final contract is negotiated and signed.
- Both parties coordinate a delivery date with their respective brokerage.
- Transaction is funded normally 3 to 7 days.
- Stock transaction can be funded with 1 day in extreme situations.
What Is A Non-Recourse Stock Loan?
A non-recourse stock loan also known as collateral loans is a type of loan that uses shares in a publicly-traded company to secure the loan. It is an excellent way for individuals and business owners to tap into the value of their stock easily and quickly without having to wait too long for the money.
Securities based lending can be a critical financing source for entrepreneurs. A stock loan is a resource they can quickly access to fund business operations.
The loan amount is determined by a loan to value (LTV) ratio which means the loan amount may be equal to 50% of the value of the shares needed to secure the loan.
In addition to other criteria, the maximum loan amount available to a borrower depends on:
- Market conditions
- Historical stock price and volume performance
- Total number of shared owned
- Market sector
What Is A Stock Pledge?
If you put up a share pledge or stock pledge agreement, you’re committing shares of stock that you own as collateral for a debt. You can pledge your stocks with a written pledge agreement with a stock lending institution who will lend against the shares that you own. When you make a pledge agreement, you can’t put up shares that have already been pledged to another lender or have any sort of lien or encumbrance on them. They have to be debt-free. Likewise, you can’t sign the agreement, then turn around and pledge the shares to someone else. Signing the pledge doesn’t affect any voting rights the stock gives you unless you actually default and have to give up the shares. If you pay off your debt, you’re done: The pledgee gives up any claim to the shares you pledged and the agreement becomes void. If you default, the lender has the right to sell the shares to recover the money you didn’t pay back. He can do this either as an outright sale, or set up an auction. If the note requires you pay off any remaining debt after the sale, insist on terms requiring the pledgee auction them off so that it brings in the most money. If they have to be sold, it should be at full market value. The benefits of securities finance far outweigh the negative aspects because of the liquidity and speed that stock lenders provide by offering a collateral loan to potential stock loan clients.
What Is A Stock Repurchase Agreement?
A stock repurchase agreement is an agreement that is used when stocks are being sold from one person or company to another. The stock purchase agreement states that a company can buy back its stock at a later date. You own a corporation, and want to buy stocks back from a stockholder. A Stock Repurchase Agreement can help make it happen. Or maybe you own stock in a company and want to sell it back. It’s smart to outline the terms first. Getting a Stock Repurchase Agreement signed can help move the process forward. There are many reasons why you might want to re-sell your stocks to a corporation. Maybe it’s a lucrative time for you to re-sell. Maybe you just want to get out of that particular investment. Perhaps you’re a partner in the corporation and want to sell to another partner. Or maybe you are the one who wants to get your stocks back – if the stockholder agrees. Perhaps you’d just like a little more control of the corporation. Regardless of your reasons, how you go about reacquiring the stocks matters. Having a Stock Repurchase Agreement makes re-selling your stocks to a corporation a little easier by clarifying all the terms in writing.
What Is A Tradeable Investment Bond?
An investment bond is a financial instrument that works by allowing individuals to loan cash to institutions such as governments or companies. The institution will pay a defined interest rate on the investment for the duration of the bond, and then give the original sum back at the end of the loan’s term. While a bond’s end return is fixed, the market conditions surrounding its sale can cause fluctuations in its price to buy. High interest rates, for example, tend to make bonds less attractive to investors by providing other means of attaining high returns with low risk. For this reason, interest rates and bond prices tend to have an inverse relationship. Investors trade bonds for a number of reasons, with the key two being—profit and protection. Investors can profit by trading bonds to pick up yield (trading up to a higher-yielding bond) or benefit from a credit upgrade (bond price increases following an upgrade). Bonds can be traded for protection, which includes being credit defensive, which involves pulling money from bonds exposed to industries that might struggle in the future. As bonds are tradable that also means that they can be eligible for an investment bond loan against the value of the bond. The bond loans would primarily be used by banks and financial institutions looking to free up liquidity either for themselves or for their clients. Bonds contain an ISIN, or International Securities Identification Number which uniquely identify the bond and thus gives our lenders the opportunity to see if the bond is worth lending against for the investor or institution holding the bond. A bond loan is very common amongst financial institutions to free up liquidity for other trades or to hedge other transactions they make.
Why Would Someone Want A Stock Loan?
The ability to convert a majority of the current market value of securities into cash without selling them outright is an attractive option for many shareholders. With that value unlocked from their shares, individuals and business owners can get the liquidity they need with ease and without visiting the bank. Using asset backed lenders that can lend against stocks and securities is an ideal way to access liquidity fast and at low interest rates.
What Are The Benefits of A Stock Loan?
- Liquidity – Stock loans are a fantastic option when an individual or business owner needs a quick financing option. It turns equity into cash with ease.
- Interest-only – No ambiguous or hidden charges; stock loans are an interest-only, transparent loan option. There are no never-ending charges that seem to extend the credit unnecessarily.
- Accessible – Stock loans are available to almost anyone. You don’t need a credit check to access one for your individual or business needs. The process is painless and straightforward, and your money is delivered to you most conveniently.
- Privacy – It provides borrowers with a trustworthy source of capital. All transactions are private and kept in strict confidence.
- Competitive – Global Stock loans offer you competitive and flexible interest rates. You typically receive better terms than you would get from a traditional marginal loan.
Re-Cap of Benefits Of A Stock Loan
There are a number of key advantages to using funding of an equities related transaction from our stock lenders.
- Fast transaction & funding
- No personal or Corporate guarantee.
- Fast and easy stock loans.
- No credit reporting in the event of a default
- Private & confidential
- Quick closing offering the ideal stock loan solutions.
- Reduce the need for traditional bank recourse financing
- No out-of-pocket expenses or up front fees
- Low interest rates or Maintenance Fees
- Fair share pricing using a three, five day or 30 day average
- Flexible terms
- Large transaction amounts accepted no problem
- Minimum lending USD100,000
- No maximum lending
Loan Against Securities Portfolio
For clients that hold existing stocks and share portfolios our lenders give you the ability to be able to release equity against the current portfolio balance. Portfolio lenders can allow a loan against securities portfolio so the client can use these funds for a range of other personal or investment purposes. To obtain a loan against shares you can see the lending criteria below. The criteria is the same also for any loans against stocks.
- Minimum finance from USD250,000 for a securities based loan. Can finance lower lending amounts if shares are highly liquid and blue chip on major stock exchanges.
- Loan to value up to 50% for blue chip portfolios. Portfolio value ideally USD500k but can be lower with liquid stocks
- Alternative Investment Market (AIM) and OTC stocks and portfolios considered on highly liquid stocks
- Acceptable securities blue chip shares on any exchange and highly liquid
- Loans can be drawn down in GBP Sterling, Euro & US Dollar
- Custody can remain with 3rd party
- Margin loan with recourse ( NON title transfer )
- Term Up To: 36 months ( early repayment allowed with full loan interests payable )
- Loan rates from : 5% pa fixed
- Interest servicing monthly after 1st year .
Why Work With Platinum Global Stock Loans and Securities Lending
Our professionalism is formed on a foundation of knowledge gained through our broad international presence and experience developed through our services in global financial markets.
PERFORMANCE AND BENCHMARKS
Our consultants and financial advisors demonstrate a strong performance record in services for our ultra high net worth individuals and institutional clients, but they are
never content to rely on that record. Rather, they have established that record as a benchmark that is to be met and exceeded in all advisory and management services for individuals and corporate entities.
A COMPLETE SLATE OF SERVICES
We provide the highest quality of services under the aegis of a single entity. Our full-service capabilities offer superior coordination of investment advice, execution, reporting, and administration with an optimum fee structure that reduces duplication and service conflicts.
NATIONAL AND INTERNATIONAL NETWORK
Our consultants and advisors maintain relationships with key opinion leaders in both global and private financial institutions in North America, Europe and throughout the countries of Southeast Asia. We have access to worldwide securities lending and worldwide stock loans with banks, family offices, ultra high net worth individuals, private institutions and many more lenders at our disposal.
24/7 – 365 SERVICES AND SUPPORT
Modern global investment markets operate around the clock. Our clients receive continuous support from our consultants and advisors on an everyday and at all times basis to verify timely execution of transactions and administration of services.
CONFIDENTIALITY AND PRIVACY
Our advisors and consultants maintain strict independence that enables them to consider the client’s financial goals above all else. We adhere to the strictest financial and
securities services regulations of professional financial regulatory bodies in the geographic markets and territories that we serve.
OUR INTERNATIONAL AND FINANCIAL NETWORK
Through our participation in multiple global debt and equity transactions, we have forged alliances with many of the top international investment and commercial banks. These alliances give our advisors and consultants access to transactions and expertise that they can then use to deliver superior financial advice and asset management services.
Platinum Global Clients and Other Available Services Via Our Lenders
Our stock loan lenders serve the investment and wealth management needs of a select group of ultra-high net worth individual and institutional clients.
Our lenders are premier providers of custody and brokerage services for both single- and multi-family offices and their advisors. Family offices partner with us for:
- A consultative approach to wealth management, and asset protection and multi-generational growth.
- Access to global financial opportunities from a financial services company that offers unparalleled financial strength and opportunity;
- Innovative portfolio management and custom operational solutions for family office administration.
FOUNDATIONS AND ENDOWMENTS:
Our lenders wealth advisors are sensitive to the challenges that foundations and endowments face within the current low return financial landscape. They create investment portfolios that focus on simplicity and fundamental research over aggressive strategies, and that allows them to generate consistently high investment returns for our clients. Our reputation reflects:
- Our focus on sustainable growth and returns with long-term viability and stability.
- An adaptive investment strategy that demonstrates creative strategies that generate high returns in evolving markets.
- Effective risk mitigation that protects and builds the value of endowed assets.
Our stock lenders Fund’s services are preferred by institutional investors and risk managers that work with municipalities, sovereign wealth funds, central banks, and finance ministries. They offer:
- Regional directors and account managers that operate in a greater global capacity to foster strategic interdependence among large institutions.
- Financial and Regulatory expertise across multiple jurisdictions.
- Risk mitigation that focuses on asset diversity, stability, low volatility, and long term growth.
Our lenders work with pension and retirement funds to achieve and maintain their members’ retirement security, and to satisfy the funds’ immediate and future financial goals. Pension funds rely on our fund lenders for:
- Risk management that offers sustainable growth with investment opportunities in multiple asset classes.
- Trusted relationships with advisors who place their clients’ interests first.
- Innovative portfolio management that reduces management fees and identifies previously-hidden avenues for additional growth and income.
WHY A STOCK LOAN?
MOST STOCK’S QUALIFY WITH OUR UNIQUE STOCK LOAN PROGRAMS
☑ NO Personal Guarantee!
☑ NO Credit Review!
☑ NO Personal Income!
☑ NO Personal Tax Returns required!
☑ NO Business Income and NO Business Tax returns required to get a loan!
☑ You can reap 100% of all the rewards of any appreciation and dividends!
☑ We can loan you up to 70% of the value of your securities with no recourse!
☑ Low Fixed Interest Rate As Low As 2.5%!
HOW WE CAN HELP
- You will instantly Gain access to Money & Liquidity fast, privately, easily and cheaply using your publicly traded stock/securities.
- Ponder this…as an expert, we have helped people like you fulfill their financial goals.
- Get liquidity for any purpose using your securities, reduce concentrated risk exposure and solve complex puzzles to permit you to instantly achieve your life goals.
- Almost all Major Worldwide Stock Exchanges are accepted as well as borrowers from around the globe .
- Now you can PROTECT your stock portfolio and GET CASH with our non-recourse stock loan or other structures.
- We lend against securities free trading on most foreign exchanges, message us now to get solutions to your specific needs.
- Many clients wisely use our stock loans to invest in their business, to buy real estate, to buy luxury items, boat, cars, rare art etc. or to just to have cash on hand.
Here Are 10 Major Benefits For The Borrowers Of Non-Recourse Stock Loans
1) You are not personally liable for the loan.
2) You are not personally guaranteeing the loan, so you may not be required to disclose to others the details of the stock loan, for privacy many borrowers prefer this feature benefit.
3) You will have a clean personal balance sheet that leaves room for other refinancing and acquisition financing opportunities and can make borrowers more attractive to lenders.
4) Our lenders have no recourse against you – They cannot go after you personally if the lender sustains a huge loss of money on your loan, The stock lender takes the loss and all the risk, you are not at risk of repaying any losses from a sudden collapse in the price of the securities pledged for your loan.
5) The lenders loan structure provides access to you to ongoing sources of capital with other financial companies because their stock loan is non-recourse.
6) You can walk away from the loan, the day after the loan is funded and not be liable for any future interest payments or principal repayment with stock lending non-recourse loans.
7) Your personal Credit, financials, income, tax returns do not come into consideration with a non-recourse loan.
8) In the case of a default, the lenders can only seize the collateral pledged for the loan and cannot go after any of your other personal assets. You are safer with a non-recourse loan and have more options and security than a recourse bank loan or a margin loan.
9) You do not have to disclose liability on financials, partners, or other financial lenders due to the fact that you are not obligated to pay back the loan and for you this maybe a major benefit why you want this structure for privacy and so it does not impact your personal financial statement.
10) You have less risk and you do not have a forced obligation for a balloon payment so if in the future… you lack money then you can easily decide to walk where with a recourse balloon payment loan with a bank or brokerage you would be forced to pay it off risking all your other personal assets.
When you, as a borrower, take out a large recourse loan with a financial brokerage or bank you put everything you own at risk if the collateral collapses. Our lenders non-recourse loans are a huge benefit for you as you are able to enjoy all the benefits of a non-recourse loan while also offering you benefits of realizing upside appreciation if your collateral increases in value.
We are not legal or tax advisors. All 10 of these benefits are at the direction of your legal and tax advisors. You should always consult your legal and tax advisor for specific advice on any loan considered.
International stock loans and global stock loans and share loans are offered for our global clients in North America, Asia, Europe Share Financing, Middle East, Central America, South America and Africa. The above details on stock loans and security loans available are a general overview. Please refer to terms in Stock Lending Term Sheets and Stock Loan Closing documents for specific terms applicable to you.
THE STOCK LOAN LENDER YOU CAN TRUST
- Loans Against Securities
- Providing you stock loans for large and small cap stocks.
- Closing your loan quickly and efficiently.
- Helping you mitigate your portfolio risk through diversification.
- Providing you with liquidity.
- Offering flexible pledged share loans packages tailored to your individual needs.
- Securing competitive interest rates.
- Providing you your personal account executive to walk you through the process.
- We speak to over 15 stock lenders on your behalf securing the best stock loans.
- We use private lenders which means you enjoy privacy and no releasing details of any loans you take.
- Never any upfront fees. You pay on success of receiving the stock loan just before disbursement of funds.
PUT OUR EXPERIENCE ON YOUR SIDE
As the direct lender with over a 6 years of stock loan experience we guarantee effective and comprehensive stock loan transaction for you or your business. Our reputation and history of successful transactions and clients speak for themselves. We pride ourselves in helping our clients – large or small, obtain streamlined financing even in today’s economy. We lend on most stock markets. We work with all types of asset based lenders that can provide the best stock loans at the lowest interest rates.
Let’s face it, Liquidity is king. So why would you not put your shares to work? Our loan stock loans are not only fast but they are safe, being that they are non recourse which is so important in this ever changing stock market. Its always advantages for client to be able to access stock loan funding when they are looking for available options when lending stocks.
If you would like to know more about the terms used on our website please visit our Securities Glossary of Terms page
STOCK MARKETS COVERED
ATHENS STOCK EXCHANGE
CANADIAN STOCK EXCHANGE
TORONTO STOCK EXCHANGE
EU NYSE EURONEXT
FRANKFURT STOCK EXCHANGE
HONG KONG STOCK EXCHANGE
INDONESIA STOCK EXCHANGE
TOKYO STOCK EXCHANGE
PHILIPPINE STOCK EXCHANGE
STOCK EXCHANGE OF THAILAND
THE BORSA ISTANBUL
LONDON STOCK EXCHANGE
OTHER STOCK EXCHANGES WE CAN LOAN STOCK ON
The list of world’s main stock exchanges and other exchange resources you can find at Stock Exchanges Worldwide Links.
- MIDDLE EAST
- NORTH AMERICA
AFRICAN STOCK EXCHANGES
- The South African Futures Exchange(SAFEX), South Africa
ASIAN STOCK EXCHANGES
- Sydney Futures Exchange, Australia
- Shenzhen Stock Exchange, China
- National Stock Exchange of India,India
- Bombay Stock Exchange, India
- Jakarta Stock Exchange, Indonesia
- Indonesia NET Exchange,Indonesia
- Nagoya Stock Exchange,Japan
- Osaka Securities Exchange, Japan
- Tokyo Grain Exchange, Japan
- Tokyo International Financial Futures Exchange (TIFFE), Japan
- Tokyo Stock Exchange, Japan
- Korea Stock Exchange, Korea
- Kuala Lumpur Stock Exchange, Malaysia
- New Zealand Stock Exchange, New Zealand
- Karachi Stock Exchange, Pakistan
- Lahore Stock Exchange, Pakistan
- Singapore International Monetary Exchange Ltd. (SIMEX), Singapore
- Taiwan Stock Exchange, Taiwan
- The Stock Exchange of Thailand, Thailand
EUROPEAN STOCK EXCHANGES
- EASDAQ, Belgium
- Zagreb Stock Exchange, Croatia
- Helsinki Stock Exchange, Finland
- Paris Stock Exchange, France
- LesEchos: 30-minute delayed prices, France
- MATIF, France
- Frankfurt Stock Exchange, Germany
- Athens Stock Exchange, Greece
- Budapest Stock Exchange, Hungary
- Italian Stock Exchange, Italy
- Macedonian Stock Exchange, Macedonia
- Russian Securities Market News, Russia
- Ljubljana Stock Exchange,Inc., Slovenia
- Barcelona Stock Exchange, Spain
- Madrid Stock Exchange, Spain
- MEFF: (Spanish Financial Futures & Options Exchange), Spain
- Stockholm Stock Exchange, Sweden
- Swiss Exchange, Switzerland
- Istanbul Stock Exhange, Turkey
MIDDLE EASTERN STOCK EXCHANGES
- Tel Aviv Stock Exchange, Israel
- Beirut Stock Exchange, Lebanon
- Palestine Securities Exchange, Palestine
- Istanbul Stock Exhange, Turkey
NORTH AMERICAN STOCK EXCHANGES
- Alberta Stock Exchange, Canada
- Montreal Stock Exchange, Canada
- Toronto Stock Exchange, Canada
- Vancouver Stock Exchange, Canada
- Winnipeg Stock Exchange, Canada
- Canadian Stock Market Reports, Canada
- Canada Stockwatch, Canada
- AMEX, United States
- New York Stock Exchange (NYSE),United States
- NASDAQ, United States
- The Arizona Stock Exchange, United States
- Chicago Stock Exchange, United States
- Chicago Board Options Exchange, United States
- Chicago Board of Trade, United States
- Chicago Mercantile Exchange, United States
- Kansas City Board of Trade, United States
- Minneapolis Grain Exchange, United States
- Philadelphia Stock Exchange, United States
SOUTH AMERICAN STOCK EXCHANGES
- Chile Electronic Stock Exchange, Chile
- Santiago Stock Exchange, Chile
- Bogota stock exchange, Colombia
- Nicaraguan Stock Exchange, Nicaragua
- Trinidad and Tobago Stock Exchange, Trinidad and Tobago
- Caracas Stock Exchange, Venezuela
- Venezuela Electronic Stock Exchange, Venezuela
We are not able to track down all pages of stock exchanges in the world because their number is increasing too quickly.
NO CREDIT CHECK REQUIRED
COMPETITIVE (LTV) RATIO
FAST CLOSING AND FUNDING
LOW RATES AND FLEXIBLE TERMS
PRIVATE AND CONFIDENTIAL
Frequently Asked Question’s
Since the credit crunch of 2007, traditional lending for small companies has declined significantly. Banks now do not have the appetite to lend out money. This is due to minimum solvency requirements imposed on the banking sector. This has significantly restricted the flow of capital. Banks have responded by concentrating their lending to larger cap corporations, to the detriment of other businesses. When banks lend to small cap companies they require more security and higher rates. Consequently, a number of other financial solutions have arisen which aims to bridge this funding gap. One area that has grown significantly in recent years for listed companies is non-recourse stock loans. Surprisingly, many financial directors are still not that familiar with this important area of finance. This email aims to give a basic overview of Non-Recourse Stock Loans, explaining what they are, how they work, along with their advantages and limitations.
A Non-Recourse Stock Loan is simply pledging security of the company in the form of ordinary shares to receive a company loan. This type of loan does not require director guarantees so the risk is solely the Company’s. A lender will agree to lend against this stock security. Like all lending, the more security pledged in comparison to the size of the loan, the less risk to the lender. Similarly, the higher trading volume or liquidity of the stock results in less risk to the lender as they can sell their holding should the Company breach the rules of the lending agreement. Non-Recourse Stock Loans by definition is a loan against the value of a stock or portfolio of stocks whereby the shareholder (OWNER) can borrow up to 80% of the stock value (in some cases higher) of the portfolio’s market value “without selling the shares“. Like a home equity loan for stocks but much better, you borrow against the appraised value of the portfolio, pay a below prime interest rate for the term of the loan and then at term end, you either pay off the loan and receive your stock back with any stock appreciation, refinance the loan or, if the stock price has fallen below the LTV amount, forfeit the shares without paying back the loan (non-recourse) with no liability or effect on your credit rating.
The first stage is the borrower will outline their lending needs. This will result in a Draft Term Sheet assuming that a deal can be reached. This Draft term sheet will include an overview of the loan, including the size of the loan, it’s duration, the interest rate, the Loan-to-Valuation (LTV), fees, and the security pledged. This draft term sheet will also include default situations along with remedies and certain liquidity requirements. The lender will stipulate how and when funding will be completed.
Assuming that the potential borrower is happy with the terms of the loan, a Definitive Loan Agreement will be delivered for signature by both parties. Once a formal contract has been entered into (Controlled Agreement), the borrower is required to establish a Securities Account with the Lender’s specified broker to hold the Security in electronic format. When the Lender receives notification that the security has been deposited and cleared, the Lender will remit funds. The Lender is required to wire funds within five working days after confirmation of delivery and clearance of Pledged Securities. It is important for the borrower to understand that the lender is not selling these shares and does not have ownership of them. These shares stay in the Company’s name and the Lender does not have access to the Custodial account unless a default occurs and both parties cannot find a suitable compromise. The specifics of this will be explained within all the necessary documentation.
1/ Swift lending decisions. Through our contacts, we are often able to get an agreement in principle within 24 hours. Furthermore, the lending process is short and money can often be with borrowers within a few days.
2/ Competitive lending rates. Through our contacts we are able to lend at very cheap rates, typically 3-6% plus a one-off arrangement fee of 2%, plus a 0.25% charge for legal fees.
3/ Transparent lending. The loan agreement is simple and easy to understand.
4/ Flexibility. Often you can have an agreement in place to have access to X amount of money, and only deposit security for each tranche of money you need. This has benefits for many project financing needs, where you are uncertain of the exact amount of money required.
5/ Protection. You do not relinquish ownership of your security. It is held in a third-party custodial account.
1/ Not all companies qualify for them. For a company to qualify they must have been a public listed company for a minimum for three years with a market capitalisation currently in excess of $100 Million USD. Additionally, they must have unencumbered security to pledge.
2/ A company needs to have a reasonable trading volume. If there is little liquidity in the stock then it would be difficult to lend as the lender has no way of liquidating security in a timely way in the event of default, and once they start to sell the value of the Stock/Security will quickly go down in value.
3/ For large amounts of lending, funds will need to be sent in tranches, due to liquidity issues of the underlying security. This may not be ideal for the borrower, as they may need the funds in one hit.
4/ Funds are sent in US Dollars. This may not be suitable for all borrowers.
5/ Security is often capped at 50-60% LTV. This is necessary to obtain cheaper lending rates.
Disadvantages of Non-Recourse Stock Loans
Any publicly traded security are eligible. Stocks, bonds, ETF’s (exchange-traded fund), ADR’s (American Depositary Receipt), Foreign Stocks are ALL eligible. Typically, we look for a minimum $75,000 daily trading volume for each publicly traded stock. Major Stock Exchange stocks are preferred.
|Africa||Egypt, Morocco, South Africa|
|Americas||Canada, Brazil, Chile, Colombia, Mexico|
|Asia||China, Hong Kong, Indonesia, Japan, Malaysia, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Australia, New Zealand|
|Europe||Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom|
|Eastern Europe||Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia, Turkey, Ukraine|
|Middle East||Dubai (DFM), Dubai, (NASDAQ), Qatar, Israel, Abu Dhabi, Jordan, Lebanon, Bahrain, Oman, Saudi Arabia|
NO, this is a “non-recourse” loan; the lender cannot come after you personally. There is NO personal liability associated with the stock loan. The only security for the loan is the stock collateral and the only recourse the lender has is against the stock. You have NO personal liability exposure. NO liens.
NO, the Securities loan is not reported to the credit agencies and there is NO public record of this loan. Even if you elect to walk away from the loan and default because, for example, you have more money then the stock is worth, it is NOT reported. The institutions are privately owned and loan HNWI and family office money so they dont have any reasons to want the press or credit agencies getting involved as the lending agreement is nothing to do with these financial and media entities.
Many securities are allowed to be put up as collateral. Some of the other countries include Canada, UK, European countries, Hong Kong, Israel, Australia, India, and Korea, to name just a few. We work with clients located all over the world and we arrange stock loan financing on exchanges all over the globe.
The LTV’s vary depending on the quality of the securities being collateralized. With high quality large cap stocks you can expect LTV’s up to 80% (sometimes higher) while with small cap or non main exchange securities the LTV’s will be more conservative and lower. This means it can be as high as 80% LTV but can be Lower. It depends upon the quality and type of security owned. Each loan is evaluated on a case-by-case basis. The highest LTVs are offered to high quality securities such as Blue Chip stocks.
Stability, trading volume and share price are factors in determining the interest rate, term and Loan to Value. Good stocks, like good investments, always get the best terms. Typically, we look for a minimum $75,000 daily trading volume for each publicly traded stock.
The most attractive interest rates and terms and conditions are available to those stocks with good strong and steady volume and price, and low volatility. Prices over $5/share typically get best prices as long as volatility is low and volume is strong and steady. Berkshire Hathaway, Amazon, Facebook, Tesla and Apple are considered blue chip stocks and ideal cases.
Strong and steady volume is highly prized as it allows some predictability. The leading indicators when determining the eligibility of a stock as collateral are going to be exchange, volatility, share price, liquidity, trends, filings, short term trading volume and long term trading volume.
Strong and steady volume is highly prized as it allows some predictability. The leading indicators when determining the eligibility of a stock as collateral are going to be exchange, volatility, share price, liquidity, trends, filings, short term trading volume and long term trading volume.
From 2.6% Fixed interest Rate: This means it can be as low as 2.6% and can be Higher. It depends upon the quality and type of security owned. (Interest Only) Stability, trading volume and share price are factors in determining the interest rate. Loans for “bonds”, the interest rate may be lower, particularly T Bills.
YES we can arrange stock loans people based in any country. Provided that the stock is listed on a major exchange and has good trading volume. We have successfully closed many loans with borrowers living in Europe, Asia, United States, Canada, Mexico and many countries around the world. Your location or where you live does not matter. If your stock is traded on a foreign stock exchange, we can help.
NO credit report is required and NOT requested. Whether you have great credit, bad credit, or no credit, there is no need to be concerned. NO credit report is pulled. The securities loan is secured against the pledged stock so no credit reports are required.
NO, your income and employment is not required and not requested. Our simple application does not ask or require this information. The loan is secured against your assets which is the publicly traded stock you are putting up as collateral.
Stock loans can close in as little as 5-7 days depending on the speed at which the borrower processes the paperwork. Simply send us the below information and we will have your stock loan term sheet with you within 24 hours.
- Stock Ticker
- Stock Exchange Stock Is Listed On
- Amount of Shares Held
- Stock Loan Amount Required
- Term Required In Years
You can do anything with the cash from the stock loan proceeds. Buy a business, buy a home, pay-off a mortgage, buy art, super cars, business expansion, investment real estate, etc. The money is yours to do as you feel as its loaned against the clients portfolio or stock holding.
Yes, you will receive a credit against the interest payment of all amounts equal to dividends, interest or other distributions on the stock during the term of the loan. However, you do not get the dividend directly.
No you are not personally liability. If you do not make the interest payments when due or fail to repay the principal when due, our only recourse is against the collateral which is the stock, and not you. The loan will be terminated and cancelled. You get to keep the money received from the stock and the lender gets to keep all interest in the stock. The default or termination is not reported to any credit references or any media organisations.
The stock loan transaction is a non taxable event per section 1058 of the Internal Revenue Code. The sale of stock will become a taxable event but in most countries and jurisdiction’s taking loans against your portfolio of stock is not taxable. (you will need to consult a lawyer or accountant in your country of residence to confirm this)
Yes, most types of bonds are eligible, such as the US Treasuries, Corporate bonds, etc. T Bills can be pledged as collateral with fixed interest rates from 2% and sometimes lower. And, we may be able to structure the terms as a matching, where all the coupon interest from the bond goes toward the interest due on the loan. This means that no interest payments would be due on the loan. Pretty much any financial instrument that has an ISIN code can be eligible for collateral loans. Different lenders specialize in different asset classes so best to speak with us about your individual asset class to see if loan stock or lending can be issued.
It is important to know that risks are involved with any type of stock transaction due to the changing nature of stocks. With that said, stock loans are often placed in a low risk investment category. This is due to various reasons, but mostly due to the non-recourse nature of many stock loans and the fact the lender holds your stock collateral and can sell the stock to cover the remaining loan balance.
The stock is transferred to the lender which has full title, but you retain all beneficial interests in the securities. You will receive any dividends, interest or any other benefits that flow from the stock during the term of the loan.
Yes. Transfers occur via secure, nationally and internationally accepted transfer using the DTC system – the safest and most common system in the U.S. securities industry. Stocks reside in these transfer accounts to await the hedging process, or are moved directly into the lender’s U.S. safekeeping account for the duration of the loan term, depending on the loan program chosen. Confirmations of every step of the transfer process, by phone and e-mail, are provided upon request to every client. DTC transfer is a common stock transfer method used by banks and brokerages throughout the U.S, Europe, Asia and many foreign countries, with an excellent record for security and transparency.
On a non-recourse loan you, the borrowers, have NO personal liability. There are general rules regarding tax treatment of a default which you would be best advised by a tax lawyer specialist. The amount realized is the difference between the loan amount and the cost basis in the stock.
There are two different stock loan programs or options to choose from.
Option ONE: If the stock portfolio decreases in value, the borrower can default without penalty. This means NO cash or additional shares are required. Just walk away from the loan without making a payment. It’s not callable.
Option TWO: If the value of the stock falls below the agreed minimum value in the contract, then there is an event of default. The minimum value is 80% of the loan amount, or whatever is agreed upon. While the interest rate and interest payment remain constant, due to the volatility of the collateral, the contract may require the borrower to contribute additional cash or shares to keep the loan viable. The decision to give additional cash or securities is solely in the borrower’s hands. The borrower could choose not to risk more capital and terminate the loan, or the borrower could choose to keep the loan in good standing by curing the default caused by the loss in value of the collateral.
The additional cash or shares tendered to cure the default do not become part of the collateral for the loan are not subject to repayment or refund at any time. At origination, the borrower and the lender agreed to a minimum fair market value for the collateral of the loan. The payment of the additional cash or securities establishes a new lower minimum fair market value and higher risk threshold for the lender and borrower alike. Those funds “buy-down” the price of the security to set a new floor for the stock and thus maintain the minimum value ratio between the amount of money loaned and the minimum value of the security for which the lender is willing to be at risk.
For example, assume the stock had a full market value of $10 per share when the loan was made. Also, assume the loan terms established a 70% LTV, so the loan was for 70% of the full market value or $7 per share. If the value of the stock falls below 80% of the loan amount, here $7, then there is a default which can be cured by the borrower. In this example, the share price would have to go below $7 x 80%, or $5.60 per share. For a default to occur, the share price in the example must fall more than 44%.
Risks in Security Lending
The risks inherent in lending securities are not always readily apparent, but must be recognized as an important consideration when operating a Securities Lending programme.
1. Counterparty Risk
Many complications can arise when a counterparty defaults on its obligations. A thorough credit assessment of all counter-parties should initially be undertaken to determine their financial status. Reviews should then be undertaken regularly. In this context, it is important to keep in mind that the fortunes of many potential counter-parties can rapidly change.
Other factors to take into account – the quality of the counterparties management and financial controls.
2. Collateral Adequacy
The margin above market value must cover market fluctuations, particularly in a rising market. This risk can be minimized by continually monitoring collateral levels and making timely margin calls.
Current market practice in Australia dictates collateral to be at least 105% of the market value of the loaned securities.
3. Collateral Title Risk
A lender should always ensure there is clear title to the collateral he holds. This is especially so with cash. An existing charge over the borrower’s assets may give a liquidator the right to recall cash collateral without necessarily returning the underlying stock because of imperfect set-off.
To a large extent, these problems are addressed in the Master Securities Lending Agreement.
4. Delivery Risk
Delivery risks occur both when Securities have been lent and collateral has not been received at the same time or prior to the loan, and when collateral is being returned but the loan return has not been received. In today’s electronic society delivery risk can be reduced with Delivery Versus Payment (DVP) transactions but at this time only cash transactions are covered.
Some other risks are – Will cheques lodged as collateral be honoured? Will the Share Registry accept the security transfers on loan repayments? The integrity of counterparties is important.
Although not common in in worldwide securities lending some lenders insist on prepayment of collateral one day in advance of delivering the loan securities, and on repayment of the loaned securities, collateral is returned one day later.
5. Regulatory Risk
Participants should always be aware of any regulatory constraints, for example, in Australia a loan of securities may not be outstanding for a term longer than 12 months or it is classed as a sale and the return would be classed as a purchase. Subsequently capital gains tax would apply.
6. Market Risk
Although maintaining margins through “Mark to Market” alleviates market risk, the risk can be made up of many components including price volatility, market liquidity and exchange rate fluctuations. Strong procedures and control systems are essential in managing this risk.
7. Accrued Benefits
The lender must be able to accurately determine which benefits he is due, and the borrower must be able to remit them on the due date. The lender must also ensure that where securities were on loan over ex-entitlement dates, but returned prior to the payable date, that the benefit due is secured.
WHAT IS STOCK LOAN: SECURITIES-BASED LENDING?
The term securities-based lending (SBL) refers to the practice of making loans using securities as collateral. Securities-based lending provides ready access to capital that can be used for almost any purpose such as buying real estate, purchasing property like jewelry or a sports car, or investing in a business.
Securities-Based Lending also is called: Stock Loan, Stock-Backed Loan, Stock-Based Loan, Securities-Backed Loan, Securities-Based Loan, Securities-Collateralized Lending, Stock-Backed Borrowing, Securities-Based Borrowing, etc. by different Borrowers and/or Lenders in different countries.
- Securities-based lending provides capital to help people buy real estate, to purchase personal property, or to invest in a business.
- These kinds of loans are generally offered to high-net-worth individuals or shareholders of public listed firms.
- The lender becomes a lien-holder after the borrower deposits their securities into a special account – the Custodian A/C managed by 3rd party Custodian Bank and/or Securities Firm.
- Borrowers benefit from easy access to capital, lower interest rates, and greater repayment flexibility and also avoid having to sell their securities.
UNDERSTANDING STOCK LOAN: SECURITIES-BASED LENDING
Generally offered through large financial institutions and private banks, securities-based lending is mostly available to people who have a significant degree of wealth and capital. People tend to seek out securities-based loans if they want to make a large business acquisition or if they want to execute large transactions like real estate purchases. Such loans may also be used to cover tax payments, vacations, or luxury goods.
Here’s how the process works. Lenders determine the value of the loan based on the borrower’s investment portfolio. In some cases, the issuer of the loan may determine eligibility based on the underlying asset. It may end up approving a loan based on the market value and liquidity of the stocks. Once approved, the borrower’s securities ( stocks ) – the collateral – are deposited into a custodian account in the 3rd party custodian bank and/or securities firm. The lender becomes a lien-holder on that account. If the borrower defaults , the lender can seize the securities and sell them to recoup their losses.
In most cases, borrowers can get cash within just a few days. It’s also relatively cheap—the rate borrowers are charged is generally variable based on the 30-day London Inter-bank Offered Rate (LIBOR). Interest rates are typically two to five percentage points above LIBOR, depending on the sum and the liquidity of borrower’s securities ( stocks) and stock’s firm’s market cap.
Also known as securities-based borrowing or non-purpose lending, securities-based lending has been an area of strong growth for investment banks since the global financial crisis (GFC). In fact, securities-based lending accounts and balances have surged since 2011, facilitated by the steady rise in equities and record-low interest rates. Such credit is popular because it tends to be easier to obtain and requires far less documentation than a traditional loan.
ADVANTAGES OF STOCK LOAN: SECURITIES-BASED LENDING
Securities-based lending has a number of benefits for the borrower. It precludes the need to sell securities, thereby avoiding a taxable event for the investor and ensuring the continuation of the investor’s investment strategy.
As noted above, SBL offers access to cash within a couple of days at lower interest rates with a great deal of repayment flexibility. These rates are often much lower than home equity lines of credit (HELOCs) or second mortgages. SBL works best when used for short periods of time in situations that demand a significant amount of cash quickly such as an emergency or a bridge loan.
SBL also provides a number of benefits to the lender. It offers an additional and lucrative income stream without much additional risk. The liquidity of securities used as collateral and the existing relationships—with typically high-net-worth individuals (HWNIs) and/or shareholders of public listed firms who use the SBL facility—also mitigate much of the credit risk associated with traditional lending.
OUR LENDING SIZE
Our lending size range is: USD1MM to USD2B+.
OUR LTV RANGE
LTV is Loan to Value ratio
Stock Loan LTV ratio = Stock Loan Lending Amount / Stock Collateral’s Market Value
Our LTV range is: 40% to 70%
OUR ANNUAL INTEREST RANGE
2.95% to 5%
OUR LENDING TERM: LOAN MATURITY DATE
2 to 5 years
OTHER OPTIONAL COLLATERAL CHOICES:
For Loan(Collateral Lending Deal), except Stocks, the Other Optional Collateral that borrower can use with us could be: Bonds, Notes, Warrants, Bitcoins(or ETH, LTC, XPR), Mutual Fund, Real Estate(HK, US Profitable RE assets are priority choice), Aircraft, Jet, Plane, Yacht, etc.
Securities Transaction structures
Securities lending transactions are typically structured in one of three ways:
- Securities loan transactions
- Repurchase agreements
- Sell-buyback arrangements.
While the legal structure of the transactions differs, the economics are similar, as there is a temporary exchange of securities, typically for cash or other collateral.Securities loan transactions. In a typical securities loan transaction, the owner of securities lends securities to a borrower which becomes contractually obligated to redeliver a like quantity of the same security. Securities borrowers are generally required to provide collateral to assure the performance of their redelivery obligation. Collateral may take the form of cash, other securities or a bank-issued letter of credit. It is standard industry practice for the lender of securities to receive initial margin, that is collateral in excess of the market value of the loaned securities. This acts as a buffer against an adverse change in the price of loaned securities relative to collateral in the event that the
borrower defaults on its return obligation. The lender receives a fee that is negotiated at the time of the transaction. Loans can be made on an overnight, open (terminable on demand) or term basis. The securities lender typically does not retain legal title to the securities that are lent. The borrower obtains full title to the securities. The transaction would not be viable if the lender retained legal title to the securities it has lent, since the borrower may need legal title to the securities to transfer them to another party. Even if the securities borrower defaults on its redelivery obligation, the securities lender has no property interest in the original securities that could be asserted against any person to whom the securities borrower may have transferred them. The securities lender’s protection is its right to foreclose on the collateral.
While the securities lender does not retain legal title to the securities that are delivered to the borrower, the lender does retain contractual rights similar to beneficial ownership. Meanwhile, the securities borrower is entitled to receive all economic rights of beneficial ownership of the non-cash collateral to the extent it would be so entitled if the collateral had not been transferred to the lender.
Repurchase agreements, commonly called repos, are securities lending transactions in which one party agrees to sell securities to another against the transfer of funds, with a simultaneous agreement to repurchase the same or equivalent securities at a specific price at a later date. Parties borrowing securities are often referred to as buyers, while parties lending securities are referred to as sellers. While market participants may execute repo transactions to obtain control of specific securities, repos are also often structured as secured cash loans, with the repo buyer receiving securities as collateral to protect it against the cash borrower’s default. In repo transactions, fees generally take on an interest component which is implicit in the pricing structure of the transaction. Securities are initially valued and sold at the current market price plus any accrued interest to date. At the termination of the repo transaction, the securities are resold at a predetermined price equal to the original sale price (market price + accrued interest), plus a previously agreed upon interest rate (the repo rate). In securities-driven transactions, setting the repo rate at a level lower than current money market yields will compensate the lender of securities. Even though the securities lender will be paying more to repurchase its securities, the repurchase price will account for the fact that the lender was able to invest the funds received from the initial sale in money markets at a higher rate than it was required to pay to the borrower of securities. In a cash-driven deal, the repurchase price will typically be set so that the lender of cash (securities borrower) earns the equivalent to current money market yields.
Unlike securities loan transactions, the transfer of the interest in securities from the repo seller to the repo buyer might be characterised as an outright sale or as the creation of a security interest. Repo transactions are typically structured such that all of the seller’s interest in the purchased securities passes to the buyer and that nothing precludes the buyer from selling, transferring, pledging or hypothecating the purchased securities. Unlike securities loan transactions, repo sellers may also retain the right to substitute other securities for those that were initially repoed out. This would typically only be agreed to by the counterparties in cash-driven deals where securities are serving as collateral for a secured loan.
In cash-driven repo deals, margin is often provided to the lender of money by pricing securities transferred as collateral at market value minus a “haircut”. The initial sale price is therefore less than the market value of the securities. Conversely, in securities-driven deals, the lender of securities will typically receive margin by pricing securities higher than their market value.
Market participants can also effect securities lending transactions by entering into separate sell and buy trades. A key element of a sell-buyback transaction is that both the sell and buy trades are entered into at the same time, with the purchase transaction for settlement at a future date. An investment rate, typically the repo rate, is used to derive the forward contract price. In a sell-buyback, the purchaser of securities (i.e. the borrower) receives legal title and beneficial ownership of the securities. The purchaser retains any accrued interest and coupon payments during the life of the transaction. However, the end price reflects the economic benefits of a coupon
being passed back to the seller. In general, sell-buyback transactions are financing trades and limited to fixed income securities. A cash borrower does not normally have the right to substitute collateral. Sell-buyback transactions have traditionally taken place outside a fully documented legal framework
Securities lending, like repo, is a type of securities financing transaction (SFT). The two types of instrument have many similarities and can often be used as functional substitutes for each other.
In a securities lending transaction in the international market, as in repo, one party gives legal title to a security or basket of securities to another party for a limited period of time, in exchange for legal ownership of collateral (although it is also possible for the collateral to be pledged and there are still uncollateralized securities loans). The first party is called the lender, even though he is transferring legal title to the other party. Similarly, the other party is called the borrower, even if he is taking legal title to the security.
The collateral in securities lending can be either other securities or cash (securities lending against cash collateral looks very much like repo). The borrower pays a fee to the lender for the use of the loaned security. However, if cash is given as collateral, the lender is obliged to reinvest the cash and ‘rebate’ an agreed proportion of the reinvestment return back to the borrower. In this case, the lender usually deducts the borrowing fee he owes from the rebate interest that he pays to the borrower, rather than paying it separately, so the fee is implicit in the rebate rate.
A key difference between repo and securities lending is that the repo market overwhelmingly uses bonds and other fixed-income instruments as collateral, whereas an important segment of the securities lending market is in equities.
Because the securities lending of equity transfers not only the legal ownership, but also the attached voting rights and corporate actions, it has become convention in the securities lending market for loaned securities (both fixed income and equities) to be subject to an express right of recall by the lender, so that he can recover securities if he wishes to exercise voting rights or respond to corporate actions. In contrast, unless a termination open is specifically agreed between the parties, repo does not allow a seller to recall his securities during the life of a transaction.
Another difference between repo and securities lending is that most repo is motivated by the need to borrow and lend cash, whereas securities lending is typically driven by the need to borrow securities. However, there is an overlap between securities lending and the specials segment of the repo market, which is also driven by the demand to borrow particular securities. And securities lending is sometimes used by securities investors to raise cash.
What are the advantages of a stock loan?
Non-Recourse Stock Loan:
Stock loans offer you the flexibility of being able to walk away from the loan at any time without hurting your credit rating or having to bring in additional collateral or cash like you do with traditional margin loans. No personal guarantee is required for our stock loans.
No Credit Report Required:
With our direct links to our institutional lenders who are direct lenders and the only collateral required is your stock so no credit check is required. Our stock loan packages are under-written in-house so you communicate directly with the lender and receive personalized service and attention to detail.
Competitive Loan to Value Ratio (LTV):
The loan to value we offer is based on market conditions, market sector, historical stock performance, stock trading volume and anticipated future stock performance. Typical LTV ratios range from 45-70%.
Fast Closing and Funding:
Since our loans are under-written in-house initially, we can get to closing quickly and fund your loan within 7 to 10 days of closing. Your funds will be wired directly into your bank account from the nominated custodians.
Low Interest Rates and Flexible Terms:
We offer competitive rates based off the current prime interest rate and loan terms of 12, 24, and 36 months. Since rates can change, we encourage you to start the application process as soon as possible so we can lock you into the best rate possible.
Private and Confidential:
All information regarding your loan is stored securely in our processing center, and only we have access to the details of your loan.
Stock loans, Repo transactions, and block trades provide immediate liquidity solutions
When equity is tied up in publicly traded securities, you have few options apart from selling the securities to generate liquidity. Large single or multi-issuer shareholders generally cannot sell their securities in bulk, leaving them with few options for on-demand liquidity.
Securities-backed financing offers a family of products and services and allows such clients immediate access to liquidity up to 70% of the value of securities, in as little as 14 days. Other features of these products include:
- Locked-in cash value to offset market volatility
- No restrictions on use of cash proceeds
- Loans and transactions are not dependent on personal credit and require no personal guarantees
- Securities can be non-marginable and can include stock from recent IPOs and stock that routinely trades for less than US$5.00 per share.
- Borrowers can elect to not repay the principal and simply walk away from the loan by forfeiting the collateral.
Stock Loan Features
Securities-backed financing offers options of fixed interest, securities collateralized loans to accredited investors in certain geographic territories with the following minimum features:
- The borrower must be seeking a loan in a minimum amount of US$500,000, maximum is uncapped
- For a stock to qualify for collateralized financing it must have a minimum 30-day average trading volume of US$300,000, however each would be considered on a case by case basis.
- The principal balance of loan cannot exceed 75% of the value of the collateral at loan closing.
- The borrower makes monthly or quarterly interest payments at fixed annual rates of between 3% and 6.5%, as set by loan underwriting.
- All collateral securities must be electronic format, and must be transferred into, and held in an account at a designated custodian during the term of the loan.
- Loan terms can be between one and fixed years, with option for annual extension at Lender’s sole and absolute discretion.
- Dividends and other share-related benefits are disbursed at loan term.
Repo Transactions features
REPO transactions give sellers an opportunity to liquidate’ a single block of publicly-traded securities at a discount, with an option to repurchase securities at a later date at the same discount, less the agreed-upon interest rate. The REPO transaction features include:
- The seller must be seeking to sell a quantity of securities with an aggregate value of at least US$4,000,000
- For a stock to qualify for a REPO Transaction it must have a minimum 30-day average trading volume of US$300,000
- The funder will purchase qualifying securities for a discount of a least 30% of their current market value
- The seller has the opportunity to exercise a repurchase option during a set period of between 1 and 5 years at an equivalent discount, less accrued interest of between 4% and 6%
Block Trading Features
Where a Seller desires to liquidate an entire block of securities with no intention of repurchasing those securities at a later date. The funder will purchase securities at a discount with full cash delivery to the seller pursuant to an expedited delivery-versus-payment (DVP) protocol.
- The seller must be seeking to a sell a quantity of securities with an aggregated value of at least US$4,000,000
- The securities will be purchased at a discount of a least 30% of their current market value
- Cash settlement will occur within 1 day of closing of Cash Collateral Control Agreement
Get in touch to hear more about our stock loan program.