Trading in capital markets products and borrowing to finance transactions (including, but not limited to leveraged trading or gearing) can be very risky, and you may lose all or more than the amount invested or deposited. Where necessary, please seek advice from an independent financial adviser regarding the suitability of any trade or capital markets product, taking into account your investment objectives, financial situation, or particular needs before making a commitment to trade or purchase the capital markets product. In the event that you choose not to seek advice from a financial adviser, you should consider whether the capital markets product is suitable for you. You should carefully consider and exercise caution in making any trading decision whether or not you have received advice from any financial adviser.
The information provided herein does not take into consideration your investment objectives, financial situation, and particular needs. Any reference to a company, financial product or asset class is used for illustrative purposes only. Where any graph, chart, formula or device is included, there may be limitations and difficulties in respect of its use. Where any historical information is included, past performance is not necessarily indicative of future performance. OCBC Securities Private Limited (“OCBC Securities”) makes no representations or warranties (including as to the accuracy, timeliness or adequacy) in respect of any information provided herein, or in your personalised AI watchlist (generated based on demographic data and your trading history with OCBC Securities), and it should not be relied upon as such. Such information should not be construed as personal trading recommendations or financial advisory in any manner from OCBC Securities. OCBC Securities does not undertake any obligation to update the information or to correct any inaccuracy that may become apparent at a later time. OCBC Securities shall not be responsible for any loss or damage howsoever arising, directly or indirectly, as a result of any person acting on any information provided herein.
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Risk Warning for Lending Securities
It is important that you fully understand the risks involved in enabling OCBC Securities Private Limited (“OSPL”) to borrow, on-lend or deliver your securities for OSPL’s discharge of OSPL’s delivery obligations of such securities to third parties. These risks include the following: (a) the borrowing and on-lending of your securities will be on a title transfer basis, which will necessarily mean that you will lose your ownership rights (including voting rights) and title to the same. In its place, you shall only have a right to request for the return of equivalent securities from OSPL; (b) where OSPL may, where relevant, have contractually agreed to use its reasonable endeavours to arrange for any voting rights to be exercised in accordance with your instructions, there is no assurance that such rights will be exercised as you wish, given that you are not entitled to personally exercise any voting rights attached to the securities lent to OSPL during the period of the loan. Therefore, where a significant corporate action or vote occurs while the securities are on loan, you may be unable to personally vote in accordance with your desired outcome or participate in the vote. Where you request for the return of the securities to you for voting, there is a risk that the securities may not be returned in time for you to exercise any voting rights; (c) your claim for the return of equivalent securities is a contractual claim against OSPL. OSPL will provide collateral to secure the obligation to return equivalent securities. Such collateral may be held by OSPL (itself or through any sub-custodian) and may be commingled together with other clients of OSPL on an aggregated and/or omnibus basis, but your interest in such collateral may not be identifiable by separate certificates or other documents or records; (d) there is a risk that any return of equivalent securities by OSPL may not occur on time for various reasons including due to settlement failures, operational errors, or disruptions in market infrastructure. OSPL may also have the right, in certain circumstances such as in an event of your insolvency, to convert the obligation to return equivalent securities to pay you the aggregate market value of the same; and (e) insofar as you will receive manufactured dividends, you may be required to treat the entire amount as income for tax purposes.
Risk warning for Securities Borrowing
You should carefully review the securities borrowing agreement/terms provided by your company. Consult your company regarding any questions or concerns you may have with your securities borrowing accounts. When you effect a sell order of securities that you do not own with the intention of buying it at a lower price than you sold it, you are short-selling. You must borrow the relevant quantity of securities sold from the company for delivery at the time of the sale. Accordingly, you are required to open a securities borrowing account with the company. You will have to pay borrowing fees to the company. As between you and the company lending you securities you are not the owner of any of the economic benefits related to the securities borrowed and therefore, amongst other things, any dividends or rights declared during the course of the loan and any rise in the price of the securities borrowed are intended to benefit and belong to the company. You will usually also have to ensure that voting rights attached to the securities borrowed will continue to be exercisable by the owner of the securities lent to you. As you have borrowed securities from the company with collateral provided on a margin basis, all the risks of margin trading (discussed above) are applicable. By borrowing securities to settle your securities delivery obligations you are effectively engaging in short selling of securities – in other words selling securities you do not have. Short-selling is extremely risky. At a certain point in time, you must “close” your short position by buying the same number of shares and returning them to the company. If the price of the securities rises, you have to buy them at a higher price. Since there is no limit to how high a stock can be priced, there is no limit as to how much you can lose. Your losses are therefore potentially without limit. If the stock splits during the course of your short position, you will owe the company twice the number of shares, although the price per share for you to buy immediately after such stock split will generally be significantly lower. The company can demand the return of the securities borrowed at any time.
Risk warning for Share Financing
Borrowing to finance the trading of securities (leveraging/gearing) carries a high degree of risk. If the value of the collaterals declines substantially, falling below the maintenance margin requirement, you may be called upon to deposit substantial additional funds on short notice in order to maintain your position. If you fail to comply with a request for additional funds or reduce your loan within the specified time, your position may be liquidated at a loss and you will be liable for any resulting deficit in your account.
