What are Stock Loans?
Stock loans are a form of lending also known as ‘securities-based lending’.. Any business or individual who holds shares of a publicly traded company can apply for a stock loan and potentially borrow against the value of their stock.
In simple terms, a stock loan is when a lender provides a borrower with a loan that is secured by their shares. This type of loan can provide you with quick access to capital, which can then be used for a wide range of purposes.
These loans are suitable for businesses that are looking to expand or for individuals who need to pay expenses. Stock loans provide borrowers with the opportunity to use the value of their portfolios for immediate monetary needs without having to sell the shares outright. Stock loans are 100% secured by your stock, so there is no risk to your personal property or other assets.
How do Stock Loans Work?
Stock loans use your shares in publicly traded companies on the Taiwan Stock Exchange to secure the loan in case of default. This type of lending is great when you need quick access to funds.
Every stock loan we make takes into account a number of significant factors. By thoroughly assessing your loan requirements, we can help you get the best value for your loan and the lowest interest rate. When evaluating your loan application, we consider:
- Request loan amount
- Number of shares you hold
- Trading volume
We’ll also need to complete a loan agreement, which sets out the terms of the loan such as fees, duration, and a description of the shares that will be used to secure the loan.
Stock loans are a flexible and convenient way of unlocking the value of your portfolio. However, we understand that the lending process can seem daunting, particularly to those who are not familiar with it. That’s why we make our loan programs as clear as possible and work closely with each individual client so that they completely understand the process.
Despite its small size, Taiwan is one of the busiest securities markets operating in the Asia-Pacific region. In fact, Taiwan is considered among the ‘Four Asian Tigers’, along with Hong Kong, Singapore, and South Korea. This is due to its highly competitive economy, which is largely export-driven and has great potential for development.
At the end of 2019, 936 companies were listed on the Taiwan Stock Exchange (TWSE), with an approximate USD1.56 trillion market capitalization. Ranked 18th in the world’s top stock markets, the TWSE supports a wide array of major companies spanning industries such as computing, electronics, and mobile hardware. Due to its convenient location and strong track record in innovative technology, Taiwan continues to attract a steady flow of global investment.
The sole stock index in Taiwan is the Taiwan Capitalization Weighted Stock Index (TAIEX), also known simply as ‘Taiwan Weighted’. It uses a weighted average to track the majority of TWSE stocks’ performance. This means that higher market cap stocks tend to have a larger impact on the market.
Services available through the TWSE include the listing and trading of securities, market surveillance, clearing and settlement, a rules and regulations directory, and other related services. The TWSE states that its goals are to drive the economic growth of Taiwan, and to strengthen the nation’s international competitiveness through improving Taiwan’s capital markets.
The trading schedule runs from Monday to Friday, with operating hours between 9 a.m and 1:30 p.m. Shares are traded in New Taiwan Dollars (TWD).
How Do Stock Loans Work?
Also known as securities lending, these loans are available to help investors keep the stock they own while still having access to the cash they need in order to make other investments. Our borrowers gain the opportunity to dip into the value of their non-marginable stock quickly and easily without having to wait a long time for the money.
Our loan amounts are dependent on characteristics of the collateralized security, including the number of shares, price, volatility, and additional criteria. By transferring your stock to us, you can be assured of receiving a loan against its value. All you have to do is make quarterly interest payments during the life of the loan. We keep the process simple: once you fully repay the borrowed amount, your stock will be transferred back to you.