Standard Chartered Bank is tying up with local brokerages to offer a scheme under which investors can obtain financing while buying their shares.
The SharePower Plus scheme allows individuals to draw up to ten times their monthly salary to invest in shares listed in Singapore.For a start, Standard Chartered has signed up two partner brokerages for its new share financing scheme.
The two brokerages are Lim & Tan Securities and Phillip Securities.SharePower Plus provides customers with up to ten times of their monthly salary to invest in Singapore-listed shares – up to a maximum of S$200,000.They may draw on this limit when purchasing shares through any broker partner.
Lim Cheng Teck, CEO of Standard Chartered Bank Singapore, said: "So from a customer's point of view, it's totally transparent to him. He just goes to the broker, does the trade and all the administrative stuff is taken care of by the bank via the credit hub, and the interchanges between the security companies, the bank and CDP (The Central Depository). So all this is hassle-free as far as the customer is concerned."Interest is charged on the amount of credit used at a rate of 12 percent an annum.The scheme is seen as an example of how banks and brokerages can join hands to help boost the local equities market.
Hsieh Fu Hua, CEO of Singapore Exchange, said: "This is a product which actually brings out the best of brokers. We hope to see more of such launch by other banks and other brokers."There are some 250,000 active share investors in Singapore.StanChart plans to sign up other stock brokers as partners to this share-financing scheme.
Views on this Share-financing scheme.
Dr. Michael Leong aka Oldman from shareinvestor:
I think the entry of StanChart into the share margin business will help propel the Sesdaq index to new highs.Firstly, more banks are likely to join in to provide margin based on salaries. For the StanChart arrangement, my understanding is that they provide margin based on a max of 4 times monthly salary, without any margin calls. Meaning that someone with a $5K monthly income can immediately buy shares worth $20K and he will never face margin calls no matter what price his shares are in the market.StanChart also has a 10 times monthly salary offering but this comes with margin calls and I doubt many would want to take this on as the margin calls are not based on max amount available but on what has been bought. This is my understanding and feel free to correct me.Sesdaq stocks are also more valuable now. The recent backdoor listing of St James into JK Tech is a case in point. St James is a relatively new company and may not fulfil all the requirements of a Sesdaq listing but will probably fulfil the requirements of the proposed new SGX board. Hence, it was stated in the reverse takeover that they will apply to go to the new board when it is available.
This is starting to smell like the tech bubble period. Back then, most people are taking so much leverage that they lost count how much they took. Most will never touch their margin calls, so most brokers would just lend. We knew what happens after that.Now SCB is bringing CFD to the mass public and even one step better. CFD allows up to 5X of your account size. But it's off the counter. SCB one is 10 X your salary and direct with SGX.
Wow...nirvana heaven for most speculators.
I can see a mass carnage soon.
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