Securities Borrowing and Lending
Short selling is a strategy that allows investors to gain from the decline in price of a security. Typically, short-sellers "borrow" the securities to be sold, and later repurchase identical securities for return to the lender. If the security price falls as expected, the investor profits from the deal.
However, according to the Securities and Futures Ordinance of Hong Kong, investors are prohibited to naked short sell any securities if they do not possess the security or believe that they will have a loan of the security at the time of sale.
To enhance your opportunity to make potential profits even from a declining market, Taifook provides Stock Borrowing and Lending service. You can now enjoy the flexibility of borrowing, short selling, and repurchasing securities via our multi-channel trading platforms conveniently and effortlessly.
What does Taifook Offer?
Stock Borrowing
You can borrow stocks from Taifook by placing instructions either by phone or in writing. The transaction will take place upon confirmation of the stock’s availability for short selling and your acceptance on our stock-borrowing offer.
Short Selling
You can call us anytime to short-sell with adequate deposit ready in the SBL account on T-day (i.e. transaction day).
Stock Returning
You can either repurchase the stocks via our Sales team or online trading channels, or transfer the respective stocks from another custodian or brokerage firm. A clear instruction that the transaction is for stock returning purpose is required. On T+2 day, money will be transferred into your account while the borrowed stocks will be returned to complete the deal.
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Example
Assume shares of Company X are currently selling for $10/share. Predicting that it will trade lower in coming days, an investor can borrow 1,000 shares of Company X from Taifook, and immediately sell those shares for $10,000 ($10 x 1,000shares). If the share price later falls to $8/share, the investor can buy back 1,000 shares for $8,000 in the market and return them to the original owner while making a $2,000 profit (less any interest incurred and service charges).
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