- The choice of the designed stocks
- Stock margin ratios
- Preferential margin loan interest rate
- Margin Call / Force-sale
- The example of investment returns by using securities margin trading services
The choice of the designed stocks
With over the hundreds number of designated stocks from the Securities Margin Trading Services (For details, please contact our Bank's staff), it helps you to realized your unique insight.
The Bank has the right to determine and vary from time to time the list of eligible stocks and the percentage of margin financing without prior notice. Please contact our staff for details.
Stock margin ratios
It increases your buying up to 60% and helps you to generate a higher potential returns.
Preferential margin loan interest rate
Loan interest* is calculated and accrued based on the usable loan balance on a daily basis and debited from the account on the last date of the month, it helps you to save the extra cost of the investment.
*Subject to the interest rates quoted by Bank of Communications Co., Ltd. Hong Kong Branch from time to time.
Margin Call / Force-sale
If the price of your marginable stock falls and the Margin Loan-to-Value Ratio reaches to 110% or above, the Bank will keep you informed of your margin position. The Bank will force sell customer's stock without prior notice when the Margin Loan-to-Value Ratio reaches to 120% or above.
The example of investment returns by using securities margin trading services
If customer holds cash with the amount of HK$100,000, he purchases Stock A (Stock margin rate 50%) at HK$20 and sells it at HK$24.
Cash Securities Trading Account
Securities Margin Trading Account
Cash amount
HK$ 100,000
HK$ 100,000
Maximum amount of Stock A can be purchased
HK$ 100,000
HK$ 200,000* [HK$ 100,000÷(1-50%)]
Maximum quantities of Stock A can be purchase
5,000 shares [HK$100,000÷HK$20]
10,000 shares [HK$100,000÷HK$20]
Amount received after selling Stock A
HK$ 120,000 [5,000XHK$ 24]
HK$ 240,000 [10,000XHK$ 24]
Profit
HK$ 20,000
HK$ 40,000
Percentage of the return
20%
40%
The above example is applied to the case of price of Stock A is increased. The return of the Securities Margin Trading Account is much higher than the Cash Securities Trading Account, and vice versa.
Risk Disclosure Statement
In relation to securities margin trading, the Customer acknowledges and fully understands that the risk of loss in financing a transaction by deposit of collateral is significant and the Customer may sustain losses in excess of the Customer's cash and any other assets deposited as collateral with the Bank. The Customer understands that market conditions may make it impossible to execute contingent orders, such as "stop-loss" or "stop-limit" orders and the Customer may be called upon at short notice to make additional margin deposits or interest payments. If the required margin deposits or interest payments are not made within the prescribed time, the Customer's collateral may be liquidated without the Customer's consent. Moreover, the Customer will remain liable for any resulting deficit in the Customer's account and interest charged thereon. The Customer should therefore carefully consider whether such a financing arrangement is suitable in light of the Customer's own financial position and investment objectives.
There is a high degree of leverage associated with margined transactions in Securities because of the small initial margin payable. High leverage can work for as well as against the Customer and can lead to large losses as well as gains. Under certain market conditions, the Customer may find it difficult or impossible to liquidate a position and therefore the losses may not be limited to the margins or Securities the Customer has paid or charged to the Bank.
The risk of loss in financing a transaction by deposit of collateral is significant. The Customer may sustain losses in excess of the Customer's cash and any other assets deposited as collateral with the Bank. Market conditions may make it impossible to execute contingent orders, such as "stop-loss" or "stop-limit" orders. The Customer may be called upon at short notice to make additional margin deposits or interest payments. If the required margin deposits or interest payments are not made within the prescribed time, the Customer's collateral may be liquidated without the Customer's consent. Moreover, the Customer will remain liable for any resulting deficit in the Customer's account and interest charged on the Customer's account. The Customer should therefore carefully consider whether such a financing arrangement is suitable in light of the Customer's own financial position and investment objectives.
In relation to communications over the internet, telephone or other electronic network, the Customer will be exposed to risks associated with the network including failure of hardware and software, delay, unauthorized interception, corruption or loss of information.