SGX Lending Programme

[iisterry]

Is anyone an active participant?

Would like to hear your thoughts on the pros & cons. I assume that one is not eligible for dividend/right entitlements while the share is lent out?

[Jon-san]

Is anyone an active participant?

Would like to hear your thoughts on the pros & cons. I assume that one is not eligible for dividend/right entitlements while the share is lent out?

There was an old post on Afralug previously on this topic, prob gone to the dumpster in the sky. But i do remember reading that you are still eligible for dividends and rights shares, though i can't be sure until i have time to check again. Too busy these few days.

[cyborg]

I registered as Lending Participant (individual) one year ago. But my shares never get lent out because I never receive the lending fees. I read that we are still eligible for the dividend and right shares.

[Jacmar]

Is anyone an active participant?

Would like to hear your thoughts on the pros & cons. I assume that one is not eligible for dividend/right entitlements while the share is lent out?

You are still entitled to all the rights and dividends. This one is a no brainer and everyone should sign up for it. You get the upside(if someone borrows from you) without the downside. the problem is not much borrowing going on. My stocks has not been borrowed for the last couple of years. Probably my stock holding are mostly non speculative ones. prior to that back in 2006/07, I used to get some extra nice lending income of a few hundred dollars.

[mikh]

hi Jacmar, i believe the single downside is that you cannot sell your borrowed share at whim. Then again, for un-borrowed stock that is committed for participation, can you sell? Will CDP accomodate and handle that coordination for you?

[Jacmar]

hi Jacmar, i believe the single downside is that you cannot sell your borrowed share at whim. Then again, for un-borrowed stock that is committed for participation, can you sell? Will CDP accomodate and handle that coordination for you?

You can sell your stocks at whim even if it is borrowred. SGX will take care of it. They just borrow it from another account. then again if you are prepared to hold your stocks why would you want to sell when you get an extra 4%/yr

[mikh]

hi Jacmar, i believe the single downside is that you cannot sell your borrowed share at whim. Then again, for un-borrowed stock that is committed for participation, can you sell? Will CDP accomodate and handle that coordination for you?

You can sell your stocks at whim even if it is borrowred. SGX will take care of it. They just borrow it from another account. then again if you are prepared to hold your stocks why would you want to sell when you get an extra 4%/yr

Thanks! I had always thought you can't sell, and sometimes you may decide you need to exit when it's going to be over-priced, or need the cash for other causes. Hmmm, i did not know it's so liquid. 4% is still a decent return in today's environ.

[Musicwhiz]

I am an active participant, but only for two of my counters.

The requirements are at least 50,000 shares in a penny stock (less than $1 per share) or at least $50,000 vested in a single company. You are still entitled to rights and dividends, but may not get to vote at the AGM unless you request for the shares to be returned (only catch I can think of).

So far my shares have never been borrowed. So much for the extra income....haha

[iisterry]

Oh, so the main problem is liquidity.

Anyone with experience from the other side of the camp? The borrower? I'm guessing shortists only?

[d.o.g.]

Anyone with experience from the other side of the camp? The borrower? I'm guessing shortists only?

If you are wondering why your shares seldom get borrowed, here is your answer:

No short-seller in his right mind would use the SGX SBL facility to borrow scrip. The borrowing cost is 10% per year! Even a CFD costs less and you can get leverage. Professional investors use prime brokers and the borrowing cost is usually less than 3%.

Only fools and rank amateurs would use the SBL to borrow scrip today.