Increase your purchasing power via Margin Financing.
Margin Financing offers a flexible credit line to clients to purchase any stocks listed in the Philippine Stock Market (PSE). You can trade by borrowing funds from Maybank ATR Kim Eng at a certain interest rate. Think of it as a loan extended by us for our customers to take advantage of market opportunities using long-term stocks as collateral.
We have competitive interest rates versus other brokers. It starts at 0.99% per month, computed based on daily Margin Utilization. Financing from our margin product may be up to 50% the amount of collateral.
Overview: Margin Financing
To understand the main benefit of trading via Margin Financing, let’s have an example. Suppose you have Php 100,000 in actual cash, and your collateral can provide you Php 50,000 of margin line.
In a Normal Trade:
Day 1: You purchase 100,000 shares of Stock A at Php 1.00
Day 5: You sold 100,000 shares of Stock A at Php 1.20
Gross Gain: Php P20,000
In a Trade Funded by the Margin, you’re able to buy 50% more:
Day 1: You purchase 150,000 shares of Stock A at Php 1.00
Day 5: You sold 150,000 shares of Stock A at Php 1.20
Gross Gain: Php P30,000
By taking advantage of Margin Financing and market opportunities, you’re able to gain 50% more than at a normal trade. Plus, you would need to pay only for the 5 days’ worth of interest when it has been utilized.
Benefits of our Margin Financing Facility
- Leverage on your portfolio – Margin Financing allows you to increase your buying power by borrowing against your portfolio and using stocks held as collateral.
- Portfolio diversification – Having the ability to borrow against your long-term investments gives you access to more funds that you can use for short-term trading.
- Trading flexibility – Having a steady line of credit enables you to ride short-term market movements and take advantage of market opportunities.
- Low borrowing costs – With monthly interest rates starting at 0.99% per month (13.31% per year including EVAT), you can potentially make higher profits with minimal costs.
Margin Facility – How does it work?
The total amount you can purchase stocks on margin is 50% of the value of marginable securities in your portfolio.
As an illustration, AC, JFC and MM are all marginable securities except PXP. In this case, one has a margin line of up to Php750,000.00 which is 50% of the accepted collateral value in the portfolio.
In a moving market, prices can fall quickly. If the equity (value of securities minus what you owe the brokerage) in your account falls below the maintenance margin, the brokerage will issue a “margin call“. Your options in this situation are:
1. Inject additional cash so that the excess loan balance is paid off
2. Lodge additional marginable stocks to increase the loan limit
3. Sell part of your non-marginable stock holdings and use the proceeds to repay part of the loan
If for any reason you do not meet a margin call, the brokerage has the right to sell your securities to increase your account equity until you meet the maintenance margin requirement. You will be informed via email if you’re in margin call.
Below is a summary of the different maintenance margin ratios and actions to be taken if they are breached:
|Less than 50% but at least 33%%, due to decline in collateral market value||Notification that this may lead to margin call|
Initial Margin Call
|Less than 50% but at least 33%%, due to a purchase||5 working days for required top-up or selling of of non-marginable shares (via Broker Aided) to comply with the Margin Ratio of 50%
Buying will be suspended.
|Maintenance Margin Call||
Less than 33%
|24 hours for required top-up or selling of of non-marginable shares (via Broker Aided) to comply with the Margin Ratio of 50%
Buying will be suspended.
How are interest charges computed?
Maybank ATR Kim Eng offers competitive interest rates vs. other brokers; it starts at 0.99% per month. Margin Interest is computed by Margin Utilization multiplied by the Monthly Interest Rate divided by 30 days plus 12% EVAT. This accrues daily and is billed and debited from account every 27th of the month.
Formula for Daily Interest:
Interest charge = (Daily Margin Utilization x (Monthly Interest Rate/30)) + 12% VAT
Margin Account vs. Cash Account
A Cash Account requires all purchases of stocks to be paid in full. You can miss out on an opportunity if cash is not readily available. A Margin Account, on the other hand, will provide you a flexible credit facility to always have cash on hand. We also give you lowest possible interest rate on any utilized margin. Moreover, you can keep your loan as long as you want—provided that you fulfill interest obligations and maintenance requirements.
What should I know before using margin?
Trading on margin simply means purchasing stocks using borrowed funds; thus incurs more risks than cash trading. This loan secured by your portfolio as collateral must be repaid with the accrued interest anytime you want.
It is important that you fully understand the concepts, rules & requirements and risks involved in trading stocks on margin.
- Margin investing is not for everyone as it increases your level of market risk.
- All the marginable stocks in your portfolio are held as collateral for your margin loan. Although, you can still sell your stocks held as collateral as long as your utilized margin is still above the maintenance margin required.
- You must repay Maybank ATR Kim Eng the amount of money you borrowed on margin regardless of the underlying value of the stocks you purchased. The borrowed amount will not change despite the fluctuations of your portfolio value.
- Interest will be accrued on your margin loan depending on the daily amount borrowed and will be deducted from your account every 27th of the month. Interest rate is based on the utilized amount computed on a per day basis. Lower interest rate may be awarded clients with higher loan utilization.
A maintenance margin requirement must be observed. Margin accounts are required to maintain a margin ratio of at least 50%–collateral value should at least be double the loan amount.
List of Marginable Securities
|Security Symbol||Security Name||Grade||Haircut|
|ALLHC||AYALA LAND LOG||A||0%|
|BPI||BANK PH ISLANDS||A||0%|
|DITO||DITO CME HLDG||A||0%|
|EW||EAST WEST BANK||A||0%|
|FPH||FIRST PHIL HLDG||A||0%|
|MPI||METRO PAC INV||A||0%|
|PSE||PHIL STOCK EXCH||A||0%|
|SEVN||PHIL SEVEN CORP||A||0%|
|SMC||SAN MIGUEL CORP||A||0%|
|SMPH||SM PRIME HLDG||A||0%|
|Security Symbol||Security Name||Grade||Haircut|
|PNB||PHIL NATL BANK||B||50%|
What are Grade A and Grade B marginable stocks
|Grade A Collateral stocks||Grade B Collateral stocks|
|Margin line is 25% of the value of the Grade A collateral stocks||Margin line is 50% of the value of the Grade B stocks|
|0% haircut.||50% haircut.|
|Example: Market value of your Grade A stock is P1M. No haircut.This is the collateral value. The margin line is 50% of the collateral value or P500k||Example: Market value of your Grade B stock is P1M. less 50% haircut is P500K. This is the collateral value. The margin line is 50% of the collateral value or P500k.The margin line that can be borrowed from a 1M Grade B stock is 250K|
Margin Ratio is computed as follows:
Your Margin Ratio is computed every end of day, and is included in the Customer Daily Margin Report which will be emailed to you every day. Each margin account is required to maintain a margin ratio of at least 50%–collateral value should at least be double the loan amount.
How do I monitor my buying power?
A Customer Daily Margin Report will be emailed every end of day to show how the buying power in your trading platform is computed as well as pertinent details on your margin account.
Can I sell my existing collateral stocks and replace it with another one?
Yes. One can sell their existing collateral stock and replace it with another collateral stock from the Grade A and Grade B marginable list as long as the margin ratio does not trigger a margin call and FALL below the margin ratio of 50%.
Buying Power is the total of your actual cash balance and unutilized margin. The margin line is used [Margin Utilization] only when cash has been depleted. Conversely, any selling transaction proceeds will first be applied to pay off any availed margin balance before it is applied to the actual cash balance.
How do I open a Margin Account?
- You must have an existing Maybank ATR Kim Eng brokerage cash account with a minimum portfolio value of PHP1,000,000
- Send your email of intent to convert to Margin account to email@example.com.
- Expect a call/email from our Helpdesk to confirm receipt of request and if there are further requirements needed.
- Sign three (3) Copies of the margin agreement, which will be provided to you by your account officer.
- Account set-up and approval may take up to 5 working days.
Who are eligible to open a Margin Account?
- Existing and new MakeTrade account holders with a minimum portfolio value of PHP1,000,000 may apply for margin.
- Must have marginable securities as collateral
- All applications will be subject to internal credit assessment and evaluation.
- Employees and Salesmen of the Maybank ATR Kim Eng Group are not eligible to avail of this product.
Definition of Terms
The basic stockbrokerage account where all buying transactions are paid for in cash.
A type of account which allows the customer to borrow funds from Maybank ATR Kim Eng against their marginable securities to purchase additional stocks in the market.
The amount the customer can borrow from Maybank ATR Kim Eng considering the collateral value and margin limit awarded. Margin Line is computed as 50% of the portfolio’s collateral value [in compliance to SRC 48.1] OR the Margin Limit assigned, whichever is lower.
The maximum value or amount available to make new purchases of non-marginable stocks. Buying power is equal to Cash available plus Unutilized Margin Line.
An email notification is sent to the customer informing that their margin ratio has fallen below 50% but above 33% because of a decline in the collateral market value due to price volatility.
Initial Margin Call
An email notification is sent to the customer informing that their margin ratio fell below 50% but above 33% because of a purchase made. A customer has 5 working days to bring up the margin ratio above 50%. Buying is suspended during an Initial Margin Call and will be lifted once the margin ratio is above 50%.
Maintenance Margin Call
An email notification is sent to the customer informing that their margin ration has fallen below 33%. The customer has 24 hours upon receipt of the notification to bring up the margin ratio to at least 50%. Buying is suspending during a Maintenance Margin call and will be lifted once the margin ratio is above 50%.
Total amount of funds used by the customer from his margin line.
Stocks which are used as collateral for additional buying power
Stocks which are not eligible to be used as collateral
Total Collateral Value
The total market value of all marginable securities