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Share Margin Financing New Guidelines
 
Product Disclosure Makluman Produk

Product Disclosure

1. What is this product about?
2. What is the purpose of this Share Margin Facility?
3. Who is eligible to apply the Share Margin Facility?
4. What do I get from this product?
5. What are the fees and charges I have to pay?
6. Do I need collateral or a guarantor?
7. What are the acceptable collateral?
8. How does MIMB determine the value of collateral based on the shares pledged?
9. What are the non-marginable counters?
10. Can I withdraw the collateral/cash with this facility?
11. When will my account trigger Counter Concentration / Minimum Number of Counters/ Counter Mix?
12. What are my obligations?
13. When will my account trigger Margin Call and Force Selling for the Facility?
14. When will the Share Margin Facilities Account be suspended?
15. What if I fully settle the loan before its maturity?
16. What are the major risks?
17. Can I do contra trading with this facility?
18. What do I need to do if there are changes to my contact details?
19. Where can I get further information?

1. What is this product about?
   
 
This is a secured credit facility granted to eligible individuals and corporations to facilitate the investment in securities listed in Bursa Malaysia. It enables the customer to enhance asset holding capability, improve cashflow as well as multiply investment power without liquidating assets.
   
2. What is the purpose of this Share Margin Facility?
   
 
To finance the purchase / investment / trading in securities listed in Bursa Malaysia.
For personal and corporate investments
   
3. Who is eligible to apply the Share Margin Facility?
   
 
Individuals, who are Malaysian citizens and Permanent Residents, aged 18 and above.
Corporations (local and foreign companies ).
   
  Documents required:
   
  Individuals
 
i)
Photocopy of the individual borrower’s NRIC (front and back).
ii) Photocopy of latest 2 years Borang J or EA Form, or latest 3 months’ pay slip. Alternative documentation or evidences for other income sources can be considered.
   
  Corporations
 
i)
Documents as per for normal trading accounts together with the relevant board resolutions and latest 2 years’ Audited Accounts.
ii) Guarantee by a director/shareholder if the company has less than RM100k paid-up capital or Net Tangible Asset (NTA)
   
4. What do I get from this product?
   
 
Facility Limit / Credit Limit: Minimum credit limit/loan limit from RM25,000 to maximum RM5mil (subject to approval).
Interest Rate: between BLR-1% to BLR+3% p.a based on the facility limit and collateral pledged.
Loan Tenure: 3 month only and may be extended to clients for the purchase of any securities for another period of three months, with rollover, if necessary.
Margin of Financing (MOF)/Quantum of Leverage:
 
i)
Pledged Securities: Securities listed on Bursa Malaysia - Subject to Rules Of Bursa Malaysia which requires a minimum equity margin of 150%.
ii) Cash Deposit: At the point of application prior to utilization of facility of cash deposit – up to 2.8 times of the cash value.
   
5. What are the fees and charges I have to pay?
   
 
Upfront fee and charges are:
 
i)
CDS Account opening fee: RM10.00 upon acceptance of the Letter of Offer.
ii)
Rollover fee: 0.25% on outstanding contracts every 90 days. This is waived if the volume of trades by the margin client exceeds three times (3X) the amount of the margin facility over the ninety-days period.
iii)
Stamp duty: 0.5% of the approved facility limit.
 
6. Do I need collateral or a guarantor?
   
 
Yes collateral is required from the client
As for the guarantor, MIMB Investment Bank Berhad (“MIMB”) will inform as and when if there is a need.
 
7. What are the acceptable collateral?
   
 
Pledged Securities: Securities listed on recognized exchanges and Bursa Malaysia
Cash Deposit : Denominated in Ringgit Malaysia (RM) in face value.
   
8. How does MIMB determine the value of collateral based on the shares pledged?
   
 
MIMB will impose a price cap (maximum price) or price discounting rate on any share/ counter at any time for purposes of computation of the collateral value and margin requirements.
   
 
Type of Securities
Discounted Value
FBM KLCI
100%
FBM Mid Cap & Small Cap
80%
FBM Fledgling
60%
ACE Market
50%
Derivatives (Warrants, ICULS, Etc.)
50%
   
9. What are the non-marginable counters?
   
 
Shares of Hong Leong Bank Bhd/Hong Leong Capital Bhd/Hong Leong Financial Group Bhd.(Prohibited based on Section 59 of the Banking and Financial Institution Act, 1989)
A company seeking protection under Section 176 of the Companies Act, 1965 to undertake a restructuring scheme and the counter has been suspended. This criterion does not apply where the restructuring is not detrimental to the financial health of the company.
A company with outstanding litigation cases and the counter has been suspended.
A company whose debts are being restructured, where known and/or publicly advertised/announced.
A company which a Special Administator has been appointed and the counter has been suspended.
A company that has proposed a capital reduction/restructuring scheme and the counter has been suspended.
A company that is designated under Practice Note 4 (PN4) and Practice Note 17 (PN17) of the Bursa Malaysia Guidelines.
Shares which value is exceeding 15% of a company’s paid-up capital.
A company counter that has been suspended pursuant to Section 137 of the Main Board Listing Requirements following the announcement by an acquirer company that it has received acceptances resulting in the acquirer company holding not less than 90% of the acquire company’s securities.
A company with Negative Shareholders’ Fund.
A counter designated as negative counter/non-acceptable at the discretion of the management of MIMB for any other reasons.
   
10. Can I withdraw the collateral/cash with this facility?
   
 
Collateral Withdrawal
   
 
i)
Collateral (Share) withdrawal is allowed as long as the current equity margin after the collateral withdrawal is within the allowable equity margin ratio.
ii)
The fee for collateral withdrawal shall be borne by the client.
   
Cash Withdrawal
   
 
i)
Not allowed unless the outstanding balance is in credit balance and the current equity margin after the withdrawal is within allowable equity margin ratio.
   
11. When will my account trigger Counter Concentration / Minimum Number of Counters/ Counter Mix?
   
 
At the point of application prior to utilization of Facility:
 
i)
If less than three (3) counters are given as collateral, the equity margin must be greater than 200%.
ii)
All warrants, loan stocks and bonds will be accepted as one counter similar to the parent counter.
   
Subsequent to utilization of the Facility:
 
i)
The value of the largest counter in the portfolio of shares pledged as collateral for the Facility should not exceed 50% of the total value of all the counters.
ii)
Clients are given a grace period of three (3) months from the date of first drawdown of the Facility to comply with this counter concentration / minimum number of counters requirement.
iii)
Clients are allowed to sell their portfolio of shares to liquidate their outstanding position with MIMB and / or to purchase other counters with value equivalent to the sale proceeds so as to comply with the number of counters / counter spread requirement.
   
12. What are my obligations?
   
 
Monthly interest payments depending on outstanding financing amount and the prevailing interest rate.
• Regularisation of account back to the approved margin of financing in the event of a margin call.
   
13. When will my account trigger Margin Call and Force Selling for the Facility?
   
 
Margin call:
 
i)
The outstanding loan exceeded the approved limit. The shortfall must be regularized by the next working day from the date of breaching.
ii)
The current equity ratio falls below one hundred and fifty per centum (150%) or such other ratio so decided by the MIMB from time to time. The shortfall must be regularized within 3 market days from the date of notice.
   
Force Selling:
 
i)
If the current equity ratio falls below one hundred and thirty per centum (130%) before the expiry of the margin call, MIMB shall be entitled to dispose or liquidate any or all the securities at such price which MIMB may deem, fit and to apply the proceeds towards reducing the amount outstanding.
   
14. When will the Share Margin Facilities Account be suspended?
   
 
When the current equity ratio is less than 150%.
When the loan outstanding exceeds the approved Credit Limit.
If the value of the largest counters in the account’s portfolio of shares pledged as collateral for the Facility subsequently to the utilization exceeds 50% of the total value of all the counters.
For any other reasons at the absolute discretion of MIMB.
   
15. What if I fully settle the loan before its maturity?
   
 
The client can fully settle the loan anytime without any penalty.
   
16. What are the major risks?
   
 
The major risk factor are the fluctuation in share prices. MIMB has the right to liquidate part or the entire portion of your shares in the margin finance account, in the event you fail to regularise the financing ratio, even if there is a major loss in the value of shares that you have pledged.
   
17. Can I do contra trading with this facility?
   
 
Yes, contra trading is allowed.
   
18. What do I need to do if there are changes to my contact details?
   
  It is important that you inform us of any change in your contact details to ensure that all correspondences reach you in a timely manner.
   
  Please contact / proceed to CDS section at:
Level 18, Menara EON Bank, 288 Jalan Raja Laut, 50350 Kuala Lumpur.
Tel: 603-2692 8899
Fax: 603-2692 7755
   
19. Where can I get further information?
   
  If you have any enquiries, please contact Share Margin Financing Section at:
   
  Level 18, Menara EON Bank, 288 Jalan Raja Laut, 50350 Kuala Lumpur.
Tel: 603-2697 1813
Fax: 603-2694 9088
   
The Information provided in this disclosure sheet is valid as at 31/05/2011.
 
 
 
   
 
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