Short Selling

Stock Borrowing & Lending allows investors to capture opportunities even if the market is going through a downward trend. Investor foresees the stock price will decline and borrow stock at target price with a loan interest and sell in the market. If the price dropped as predicted, investor can buy back that stock at a lower price and make profit with the price difference by deducting the trading and interest costs.

Advantages

The bid-ask spreads are lower

Can make profit without relying on the liquidity provided by distributors

Will not be affected by the factors of volatility and outstanding volume

Stock Borrowing & Lending Process

Borrow Stock:

Open a short sell account with CHIEF
Enquire CHIEF if the desired stock is available for short selling;

Short Selling:

Once stock borrowing is confirmed by CHIEF, you can contact designated staff to make short sell instruction
Initial margin is required to deposit before 5:00pm on T day; (For example, 1000 shares of Tencent (#00700) are successfully sold (Selling price $100), initial deposit: 125%, where 25% of the transaction amount is $25,000 and 100% is principal of short sell)
The calculation of SBL Loan interest start at settlement day (T+2)

Stock Return:

You can buy back through Internet or our staff. After that, you must inform CHIEF, otherwise the return process will not be completed
The loan fee will be deducted from the short sell account at settlement day (T+2)

*Short Selling Examples

Example 1:
Maintenance Margin is 115% of market value
If Tencent (#00700) price rises to HK$110
Margin ratio = 114% [125,000 / (HK$110*1,000), lower than 115%]
Since the margin ratio is lower than 115%, Margin deposit is needed.
Deposit amount= HK$11,250 [1.25 * (HK$109 * 1,000) - 125,000]

Example 2:
If Tencent (#00700) price falls to HK$90
Margin Ratio = 139% [125,000 / (HK$90 * 1,000), larger than 115%]
No margin deposit is needed.

Importance

Short sell order can only be made when stock borrowing is confirmed by CHIEF
The short sell order must be conducted in continuous trading session, and the selling price must not be lower than the ask price

If the price keeps rising, the client will bear unlimited floating loss
If the dividend payment occurred, the company will deduct the dividend from your account at the Ex-Dividend date

Charges


SBL Registration Fee	HK$300 (Include HK$270 First Registration Fee and HK$30 administration fee)
Administration Fee	HK$100 (Given that stock borrowing or lending is executed from January to June / July to December)
Loan Fee	Differ from stock and subject to minimum charge
If you have any queries, please contact our customer support hotline (852) 2500 9199 (852) 2500 9199.

Related Services

E-Account Opening

Online Appointment

Apply in Person