Maximize your returns even as a veteran investor

Singapore Exchange - SGX is where we buy and sell stocks on a regular basis.

All credits goes to Li Guang Sheng for this! 

Posting for awareness.

This is a guide on how to maximize your returns, even as a seasoned investor, from owning shares in CDP through share borrowing and lending through Singapore Exchange (SGX)


Did you know?! 

That shares you own in your CDP Account can be lended out to the Singapore Exchange (SGX) for a fee - up to 4% per annum.
I really hope this can help you earn more which to me is risk free. I highly recommend doing it as there is nothing to lose but only to gain. It is not publicize by SGX so a lot of investors do not know about this, even the seasoned ones. If shares are lend out, they can earn up to 4% per annum which is passive money.


So here's the guide..
If you own shares like Ascendas Reit, Capitaland or any shares that are in high demand, the higher chance you can lend out. If you have no intention to sell your long-term holdings, you might as well lend out to SGX to earn extra interest on top of your capital gains & dividends. This may not be a bad idea if your shares in CDP are idling. We should always ensure our money make money for us.

Below is a copy from SGX which is a fact.
As you invest and hold securities for their capital gains and dividend income, you can also benefit from securities lending and improve total earnings from your portfolio. Securities lending is the temporary transfer of securities from a lender to a borrower for a fee. Borrowers are typically Depository Agents, Member Companies and Banks. The borrower is obliged to return equivalent securities to the lender at the end of the loan period or upon termination of the loan.

If you are a CDP Securities Account holder, you can participate as a Lending Participant in the SGX Securities Lending Program. As a Lending Participant, CDP will pay you a lending fee if you have eligible securities which have been selected by CDP to be borrowed. You can register as a Lending Participant now even if you do not currently own any eligible securities, or the requisite quantity of eligible securities. Once your securities holdings meet the eligibility criteria, CDP may borrow your securities when there is demand.


BENEFITS


  1.  Earn a fee
  2. The fee you earn from lending your securities provides additional income on your portfolio.
  3. No participation cost
  4. There is no cost to register as a Lending Participant, and no associated costs with lending.
  5. You can sell anytime even if your shares are being borrowed. You may sell your securities at anytime, even if they are on loan. There is no need for you to recall your loaned securities as CDP will deem your act to sell, transfer or dispose of your securities as a notice to terminate the loan. CDP will deliver equivalent loaned securities into your CDP Securities Account on the settlement or effective date of such sale, transfer or disposal. However, please take note of possible risks associated highlighted in FAQ section.
  6. Lenders deal with CDP as principal
  7. CDP will be the borrower of your loaned securities and is contractually required to ensure the return of equivalent loaned securities or their cash value equivalent upon termination of the loan.
  8. Your confidentiality will be maintained
  9. CDP is contractually required to keep confidential information relating to securities lending transactions, subject to certain exceptions set out in the SGX Securities Lending Terms and Conditions for Lending Participant and Lender.
  10. All Lending Participants will be treated fairly
  11. CDP allocates loans and the return of securities fairly amongst the pool of registered Lending Participants. Lender selection is based on an allocation algorithm which ensures that each Lending Participant stands an equal chance to lend on a daily basis. ----> script lending rotated among the pool


If you manage to lend out, you are given a certain interest per annum, depending on what stock or reit it is. Every stock or reit have different lending and borrowing interest rates. 

To know which stock or reit have what rates, go to SGX Lending Pool Website.https://www1.cdp.sgx.com/sgx-cdp-web/lendingpool/show

Funds/ Broking housing who wishes to borrow from SGX are charge 6%. SGX make 2%. We earn the rest. Varies for different shares, so take note.


In your CDP Account, below your shares, there is a "My Securities on Loan / In Transit". People were always wondering and asking what is this for - Well that is where we see if our shares will get lend out or not.


My Securities on loan or in transit. Lending out shares you own in CDP to earn extra money.


Two important things to note!
  • Shares that are worth less than <$1, are required to have at least 10,000 units to lend out.
  • Shares that are worth more than $1>, are required to have at least $10,000 in value to lend out.

"Once your securities holdings meet the eligibility criteria, CDP may borrow your securities when there is demand," SGX said. 


How to sign up for the SGX's lending program?
Print out the Lending Securities Program Form, fill in your details and mail it to SGX's address.

Misconceptions

A lot people worry about the risk and are scared that if they lend out, they cannot sell. All these are misconceptions. That scheme apply to shares park in your own CDP account but not shares in custodian accounts that you buy and sell through banks.



This is a very good way to earn passive money so consider it on your own terms. I have nothing to gain from it by promoting it. But since I see that it has no risk and only potential passive gains so I think it is worth spreading the love. Times are bad so every cent counts. 

It does not mean if you sign up, you will get your shares lent out but at least signing up give you more hope of lending out the shares and earn extra passive income.



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