THE LOAN PROCESS
The process takes place in six straightforward procedures as we have outlined them below as your guide when considering obtaining a loan through us:
You need to fill an on-line quotation request and submit details of your stock symbol, the exchange you trade in, the amount or number of shares you are using as security and how much (loan) you wish to borrow.
We will then determine the viability of the stock and submit the loan request to our international lender network. We are a preferred lending broker with many different lenders worldwide. We will then find out from them a verbal quotation of the loan you have requested.
Before providing us with a stock quote, these lenders will determine the stock liquidity and volatility relative to the current value of your stocks. Since the interest rates and terms we receive normally varies from one lender to another, we compare the lender quotes, then pick the best and request a written term sheet.
A written term sheet is a testimonial that indicates the terms of agreement and conditions of the stock loan being given. This document assists in understanding basic stock loan terms and conditions and helps both the lender and borrower in their negotiation process.
However, before you are given a written term sheet. You are required to produce a brokerage statement which will verify your ownership of the stocks you intend to use as security.
Once the third phase has been completed, the lender will issue you with a written term sheet that you, the borrower, can use to execute. Parties agree on and finalize the terms and conditions as stated on the term sheet. Borrower request a Loan Agreement and a custodian bank is chosen by the lender.
Once the loan agreement has been signed, steps are taken to transfer the securities to the custodian institution.
The custodian of the securities will be a bank or brokerage house in the borrower’s country. For example, if you live in Hong Kong, your custodian will also be based in Hong Kong.
The stock titles and legal ownership will remain with the custodian under your name through the loan period.
Consequently, the sixth step commences with the signing of the Loan Agreement by the lender and the borrower and the custodian (bank or transfer agent). After which you, the borrower, will deposit your public stocks that will act as your security in the hands of the custodian.
Once this has been fulfilled, the lender then wires the money to the custodian. This money is free for you to transfer and withdraw any way you wish.