How Does Margin Trading Work?

How does margin trading work? Margin financing and securities lending transactions, also known as "securities credit transactions" or margin trading and securities lending transactions, refer to investors providing collateral to securities companies qualified for margin trading and securities lending business, borrowing funds to buy securities (margin financing and securities lending) or borrowing securities and The trading behavior of selling (securities lending transaction). ) Behavior. Including securities companies' financing and securities lending to investors and financial institutions' financing and securities lending to securities companies.

This article takes Everbright Securities as an example to introduce the process of margin trading and securities lending:

1. Basic conditions for investors to apply to carry out margin trading and securities lending transactions at Everbright Securities

1. Before investors apply for margin trading and securities lending transactions at Everbright Securities, they must have opened a general securities account at Everbright Securities for no less than 18 months, and the trading period must be no less than 6 months.

2. The total assets of ordinary accounts opened by individual investors at Everbright Securities should reach RMB 500,000, and the total assets of ordinary accounts opened by institutional investors at Everbright Securities should reach RMB 1 million.

3. Other conditions stipulated by the securities regulatory authorities and Everbright Securities.

2. Materials required for investors to apply for opening Everbright Securities margin trading business

Before investors apply for margin trading, they need to provide the following application materials:

1. Application materials that individual investors need to submit: personal identity certification materials (ID card or household registration book, etc.), ordinary securities account cards, and relevant credit information materials (can consult the business department);

2. Application materials that institutional investors need to submit: copy of valid legal person business license or registration certificate, organization code certificate, tax registration certificate, legal representative certificate and original ID card, power of attorney signed by the legal representative, agent (Authorized person) ID card, ordinary securities account card, proof of residence and relevant credit information materials (please consult the Everbright Securities Sales Department).

3. Operational procedures of Everbright Securities’ margin trading business

Everbright Securities process description:

1. Investor application: Investors should apply to the Everbright Securities Sales Department to open a margin trading transaction and submit relevant identity certification materials and credit information (you can consult the Sales Department);

2. Qualification review and credit investigation: Everbright Securities reviews investors’ qualifications for opening accounts, conducts credit investigations on qualified investors in accordance with regulations, and evaluates customer credit status;

3. Sign the contract and risk disclosure letter: Investors who pass the credit report shall go to the Everbright Securities Sales Department to sign the "Margin and Securities Lending Contract" and the "Margin and Securities Lending Transaction Risk Disclosure Letter"; the rights and obligations of the contract to investors and securities companies The relationship is specified in detail and clearly.

4. Account opening: After being reviewed by Everbright Securities, the business department of Everbright Securities will handle the credit account opening business for the investor, and the investor will go to a commercial bank to sign a third-party custody contract.

5. Collateral transfer: Investors can transfer the collateral to the credit account at the sales department counter or other trading channels. That is, the investor transfers the guaranteed funds to the credit fund account through the bank and transfers the securities that can be used as collateral. Transfer to credit account. Margin for ordinary securities accounts. Transfer to credit securities account;

6. Credit: Everbright Securities determines the financing amount and securities lending amount that can be provided to investors based on the overall secured asset assessment of the investor’s credit account;

7. Margin and securities lending transactions: After investors transfer their collateral, they can conduct financing or securities lending transactions, including margin buying and securities lending and selling;

8. Repay funds and securities: In financing transactions, when an investor performs a selling transaction, the funds obtained will first return the amount owed by the investor to the securities company to the securities company, and the balance will be retained in the investor's credit account; In securities lending transactions, investors return the purchased securities to the securities company and pay the securities lending fees. In addition, investors can also directly use existing funds and securities to repay the securities company's margin financing debt according to the contract.

9. End the margin trading and securities lending transactions: After investors have paid off the securities company’s margin trading and securities lending debts in full, they can transfer the remaining assets in their credit accounts to their ordinary accounts.

标签： #Securities #Financing #Everbright #Investment #Account