Margin Lending
Who is Value Nominees Pty Limited?
Value Nominees Pty Limited (a wholly owned subsidiary of Westpac Banking Corporation), is the new sponsor for the loan security in place of HSBC Securities Investments (Australia) Pty Limited and HSBC Margin Lending Nominees (Australia) Pty Ltd ACN 004 527 744.
What is the interest rate on my loan?
Please log on to your margin lending account or refer to our interest rate flyer, available via internet account access at www.directmarginlending.com.au
What is an Acceptable Securities List?
This is a list containing a range of shares that Direct Margin Lending will accept as collateral, or security, against your Margin Lending Facility.
When I borrow funds, what can I use them for?
You can use the funds you borrow to increase your investments or for business purposes, such as purchasing new equipment or expansion but excluding purposes to purchase, renovate or improve residential property.
How do I lodge my shares as security?
If your existing holdings are Issuer Sponsored we require copies of your latest Issuer Sponsored Holding Statements with a request to convert these shares onto your account. If your existing holdings are currently Broker Sponsored please request your broker to transfer your shares to our CHESS sponsorship, or complete the share transfer form on our website.
Can I sell the shares I lodge with you as security?
You can always sell any of the shares in your portfolio including those you originally lodged as security. As your broker will deliver the proceeds of the sale directly to us, the sale funds will automatically pay down your loan balance.
How do I buy and sell shares through my Margin Lending Facility?
You can buy and sell shares through a trading account with a broker of your choice. You will need to advise them that your trades are to be settled through your Margin Lending facility and that a copy of the contract note must also be sent to Direct Margin Lending so we can settle them on your behalf.
Can I drawdown on my margin loan?
Yes, you can get a loan advance. Complete the Drawdown Request Form on our website and fax it to 1300 768 894 or Intl. +61 2 9995 8280.
How do I change my personal details?
Your change of details must be obtained in writing. Simply complete the 'Update My Details' form available on our website, then please mail it to Direct Margin Lending PO Box R1842 Royal Exchange NSW 1225 or faxed to 1300 768 894 or Intl. +61 2 9995 8280.
How does Direct Margin Lending manage stock ownership?
Direct Margin Lending has never been, nor is currently a stock lender. All stock lodged with Direct Margin Lending as security for a margin loan is held under your own Holder Identification Number (HIN) with the Bank's nominee company, "Value Nominees Pty Limited", being the CHESS sponsor for the stock until such times as the loan is repaid. Voting and income rights continue with you unless there is an event of default by the client.
Internet Account Access
Do fees & charges apply when I use Internet Account Access?
No. This is an additional free service provided to make managing your loan simple and convenient.
How secure is Internet Account Access?
You can be confident that your account is secure. St.George Bank has employed the latest security encryption methods and Internet Account Access is further protected by your User Name and Password, which you should always keep confidential.
Is my account information 'real time'?
You can view your internet account details in real-time*. Your details are now being displayed within minutes of us processing any transactions or changes you request. Please note that details will be displayed as at the time you opened or refreshed this page and pricing will be reflected approximately 20 minutes later.
*subject to system availability
Does my financial adviser automatically have Internet Account Access to my account?
Unless you specifically request for this, only you have access to your account details through Internet Account Access.
How do I contact Direct Margin Lending?
The address for all correspondence to Direct Margin Lending is:
Direct Margin Lending
PO Box R1842
Royal Exchange NSW 1225
Phone number:
1300 300 128
Fax Number:
1300 768 894 or Int’l fax +61 2 9995 8280
Email:
directmarginlending@stgeorge.com.au
Website:
www.directmarginlending.com.au
We can also be contacted at directmarginlending@stgeorge.com.au.
Who should I address cheques to?
Any cheques should be made out to Direct Margin Lending and mailed to the above-mentioned address.
Margin Calls
What is a margin call?
A margin call occurs when your current loan balance exceeds your borrowing limit plus your buffer. While we provide a buffer to accommodate market fluctuations above your borrowing limit, for example when the value of your security falls, if the amount outstanding exceeds the borrowing limit by more than the buffer you will be in a margin call. If this occurs you must repay part of your loan by 2:30pm (Sydney time) on the day the bank indicates you must meet the margin call (normally the day after you have been notified).
How do I know I am in a margin call?
It is your responsibility to regularly monitor your account and manage your facility position. You can do so by logging on to your margin lending Internet Account Access. In the event of a margin call, we will also try to contact you either by phone, email, SMS or ordinary mail. It is important your contact details are always kept up to date.
To assist you in managing your margin loan, Direct Margin Lending provides an electronic notices service. If we have your mobile telephone number and/or email address on file, we will attempt to notify you via email and/or SMS when your loan balance exceeds 50% of your buffer or your loan goes into a margin call.
If we do not have your mobile telephone number and/or email address on file, Direct Margin Lending will attempt to notify you via telephone on the contact number you have provided.
Please note we cannot currently accept international mobile numbers for SMS notices.
How can I rectify a margin call position on my margin loan?
You can rectify a margin call in 2 steps:
Step 1: Determine which of the following 3 options, or a combination thereof, you wish to take to meet the margin call:
Option 1: Deposit cash to the value of the margin call into your loan account.
You can do this by electronic transfer to the following Direct Margin Lending account, direct deposit to your Cash Management Account (CMA) or via BPAY®.
Electronic Transfer
Bank: St.George Bank
BSB: 332 –096
Account: 599000006
Account Name: St.George Margin Lending
Important: - Reference: You must include your Client Reference Number
If you have a linked CMA
Either a direct deposit into your CMA or:
Deposit cash into your CMA using BPAY®:
Biller Code: 162008
Biller name: St.George Margin Lending
Reference: Your CMA Account Number
Option 2: Transfer additional approved securities to increase your security value.
You need to transfer enough security to restore your amount outstanding to your borrowing limit or below. This can be determined by dividing the margin call cash amount by the LVR of the security you wish to transfer:
Value of security to transfer = margin call cash amount / LVR of security to transfer
Option 3: Sell sufficient quantities of your portfolio and use the proceeds to reduce the loan balance to within the borrowing limit.
This can be determined by dividing the margin call amount by 1 minus the LVR of the security you wish to sell:
Value of security to sell = margin call cash amount / (1 – LVR of security to sell)
Step 2: Notify Direct Margin Lending that a margin call has been met
Please ensure that you notify us of any action in relation to a margin call prior to the time given to meet the margin call (normally 2:30pm Sydney time the business day after you have received a margin call). You can do this by:
- Calling 1300 300 128 8.00am–6.00pm Monday to Friday and speaking with one of our Account Managers or;
- E-mailing us at directmarginlending@stgeorge.com.au including details of your account name and number and what action you have taken to restore your position
- Faxing us on 1300 768 894 or Int’l fax +61 2 9995 8280 including details of your account name and number and what action you have taken to restore your position
Please note:
If you are unable to rectify a margin call Direct Margin Lending may sell enough security to restore your loan balance to your borrowing limit or below. We may be required to sell your security even if we were unable to contact you or your adviser or we were not notified that a margin call had been rectified. It is also important to note that once in margin call the margin call can only be rectified through the steps outlined above.
Buffer Amount
What is the buffer?
The Buffer is the amount by which your borrowing limit can be exceeded before you are required to satisfy a margin call.
How is the buffer amount determined?
The buffer amount is calculated as a percentage (generally between 0 and 10%) of the market value of each acceptable security within your portfolio. These values are totalled together to make your buffer amount. There is no buffer for cash, or for securities that Direct Margin Lending does not lend against (ie 0% gearing). See the example below:
| Security | LVR of security | Market Value of holdings in portfolio | Borrowing Limit | Buffer % ^ | Buffer amount |
| WBC | 75% | $50,000 | $37,500 | 10% | $5000 |
| RIO | 75% | $15,000 | $11,250 | 10% | $1500 |
| WES | 75% | $20,000 | $15,000 | 10% | $2000 |
| ADG | 0% | $10,000 | $0 | 0% | $0 |
| Cash | 100% | $30,000 | $30,000 | 0% | $0 |
| Total | $125,000 | $93,750 | 6.8% | $8500 |
How can I find out my buffer amount?
Your buffer amount is displayed on the Account Summary page when you log on to view your account using Internet Account Access. You can access Internet Account Access through our website www.directmarginlending.com.au. If you have not yet signed up for Internet Account Access or have forgotten your login details, contact our Account Management Team on 1300 300 128 from 8.00am – 6.00pm (Sydney time) Monday to Friday.
How will I know when I’m ‘in buffer’?
You are in buffer when your total loan is more than your borrowing limit, but less than your borrowing limit and your buffer combined.
For example:
| Borrowing Limit | $70,000 | |
| Buffer | $5,000 | |
| Total Loans Outstanding | $73,000 (ie more than $70,000 but less than combined sum of $75,000) | |
| Available Funds | -$ 3,000 |
Your available funds will be negative as usually Direct Margin Lending will not allow you to purchase securities or withdraw cash when you are in buffer. You should take this as a warning that your account is close to a margin call and you need to take steps to ensure you can bring your account out of margin call if required. For more information about satisfying a margin call see the Margin Call Frequently Asked Questions.
How will I know when I’m in margin call?
Once your total loan exceeds your borrowing limit and your buffer combined, you are in margin call. You will still be considered to be in margin call if your loan goes back into buffer after a margin call until you satisfy the entire margin call amount.
For example:
| Borrowing Limit | $70,000 | |
| Buffer | $5,000 | |
| Total Loans Outstanding | $76,000 (ie more than combined sum of $75,000) | |
| Available Funds | -$6,000 |
In this example the equivalent amount of cash to be deposited to satisfy a margin call is $6,000, or the negative available funds amount. Once you are in margin call it is not enough to repay anything less than the equivalent of $6,000 in cash as the account would still be considered to be in margin call. For more information about satisfying a margin call see the Frequently Asked Questions about margin calls.
How will I know when I have exceeded my borrowing limit?
Your outstanding loan will be larger than your borrowing limit and your available funds will show as a negative. Whether you are in buffer or in margin call depends on how much you have exceeded your borrowing limit by. See the above example for more information.
Can I purchase more security using a loan when I am in buffer?
No.
When will a trade of stock/funds affect my buffer amount?
Stocks generally settle on the third day after the trade (T+3) and will affect your buffer amount once settled. You can see the affect of any pending trade by looking at the T +1, T + 2 and T + 3 columns on the Account Summary page on Internet Account Access.
Managed Fund applications are given an estimate value when we enter them into our system after receipt of your application. Therefore the buffer amount is also estimated at that time. The value is updated to reflect the exact value when we receive confirmation from the fund manager.
Will I be notified when I am in buffer?
Direct Margin Lending will not contact you when you are in buffer. It is your responsibility to regularly monitor your account and manage your facility position. You can do so by logging in to Internet Account Access via www.directmarginlending.com.au. In the event of a margin call, we will try to contact you either by phone, email, SMS or ordinary mail. For this reason it is important that your contact details are always kept up to date with us.
How can I obtain more information about my buffer?
Our Account Management Team can assist with any further enquiries by calling 1300 300 128 8.00am – 6.00pm (Sydney time) Monday to Friday or by email at directmarginlending@stgeorge.com.au.
Credit Limit
Q. How will I know if I’m close to my credit limit?
A. We will attempt to contact you if your loan has reached 80% of your credit limit. We will attempt contact you again if it reaches 95%.
You should closely monitor your loan via Internet Account Access to ensure your loan balance does not exceed your credit limit. If you haven’t signed up for Internet Account Access, contact our Account Management Team on 1300 300 128, 8.00am – 6.00pm Monday to Friday (Sydney time).
You should also ensure that we have your correct contact details which you can check via Internet Account Access.
If you need to update your contact details please use the “Update my details” form available on directmarginlending.com.au
Q. What happens if my loan exceeds my credit limit?
A. You must not breach your credit limit. If this occurs your account will be in default and you will no longer be able to draw down on your loan.
We will also contact you to advise how long you have to bring your account back into order.
You will have a limited amount of time to do this and we may exercise our rights to sell your securities to bring your loan balance back within your credit limit.
Q. Can interest charges result in a breach of my credit limit?
A. Yes, the capitalisation of interest charges can cause the breach of your credit limit.
To avoid this you must make repayments that cover your interest charges or sufficiently reduce your loan balance to allow for future interest capitalisation.
Q. Can savings gearing result in a breach of my credit limit?
A. Yes, you need to ensure you have sufficient funds available to continue your savings gearing plan.
If your loan balance reaches 95% of your credit limit, your savings gearing plan will be automatically cancelled.
Q. How can I avoid exceeding my credit limit?
A. If you think your loan balance is likely to increase above your credit limit, you can prevent this by:
- Reducing your loan balance by making a payment or selling securities, or
- Requesting a credit limit increase by contacting our Account Management Team on 1300 300 128, 8.00am – 6.00pm Monday to Friday (Sydney time).
CMA
What is a CMA?
A CMA is a cash management trust account linked to your margin loan. You can deposit cash to this account which is lodged as security to the margin loan, geared at 100%. Direct Margin Lending has opened a Cash Management Account (CMA) on your behalf with Value Nominees, a wholly owned subsidiary of Westpac Banking Corporation, as the trustee.
What are the benefits of a CMA?
The following are some of the benefits of a CMA:
- You have an account to deposit your cash which is geared at 100% for your margin loan.
- You earn credit interest on credit balances in the CMA.
- You can nominate relevant Share registries to credit dividend payments into this account.
- This setup helps optimise your interest payments by allowing funds transfer between your CMA and variable margin loan (and vice versa).
What is the cost of setting up the CMA?
We set up the CMA on your behalf for free.
Under what name is the CMA set up?
Margin lending CMAs are opened on your behalf by Value Nominees Pty Limited, a wholly owned subsidiary of Westpac Banking Corporation.
Do I need to provide a TFN or ABN? What are the implications if I don’t?
You do not have to provide us with your Tax File Number (TFN) or Australian Business Number (ABN). However, if you choose not to, tax may be withheld from any interest earned on your CMA at the highest marginal rate plus the Medicare levy. For more information about TFNs and ABNs, please contact the Australian Taxation Office.
Is there a minimum balance required to be maintained?
The CMA always retains a minimum balance of $1.00.
How do I deposit funds into my CMA?
Your CMA has a BSB and a unique account number which appears on the Margin Lending Internet Account Access and on your margin lending or CMA statements. You may choose to send us a cheque, (made payable to Direct Margin Lending) or, make a direct deposit into your CMA via your bank’s internet banking or BPay.
When is my deposit reflected in the CMA?
For funds transferred electronically before 5pm on weekdays, the deposit will be reflected in the CMA on the next business day.
Is there an overdraft facility on my CMA?
There is no overdraft facility on your CMA. However, if you wish to draw funds from your margin loan, please complete a Drawdown Request Form.
Where can I check my CMA details?
CMA details are available via your Margin lending Internet Account Access, under Bank Account Details. You can also check the balance on the Portfolio summary screen under security code SGBCMA
Do I earn interest on my CMA balance?
Yes, you earn interest on any credit balance on your CMA. For the latest CMA interest rate, please refer to our interest rate flyer, available via internet account access at www.directmarginlending.com.au
How do I transfer funds between the CMA and my margin loan?
You have two options on the margin lending or CMA application form.
Your first option is to have the funds automatically transferred between your CMA and variable margin loan (and vice versa). This is the default option.
The second option is to transfer the funds between your CMA and the Margin Loan (and vice versa) only upon request.
If you select option one, you can rest assured that this will automatically transfer any credit balance on your variable loan to the CMA so you can earn interest, and, transfer funds in the CMA to pay off your variable loan if it has a debit balance, (whichever is applicable) reducing the total amount of interest you pay.
Can I change the option of transferring funds between the CMA and my margin loan?
Yes, you can change your selection at any time. Simply fax us a written request on 1300 768 894 or post it to Reply Paid 1842, Royal Exchange NSW 1224.
When are funds transferred between the CMA and my margin loan?
This is a daily process and is updated at the end of each business day.
How do I access the money in the CMA?
To access the funds in your CMA, please check that the amount you wish to withdraw is less than your available funds and then fax us a request on 1300 768 894 or post it to Reply Paid 1842, Royal Exchange NSW 1224. You can only draw funds from your CMA by instructing Margin Lending. You can not draw funds directly from your CMA via internet banking or by going into a branch.
What fees do I need to pay on the CMA?
There are no fees on your CMA.
Do I receive statements for the CMA? How often?
Yes. Unless you have elected otherwise, you receive six monthly CMA statements in January and July respectively.
Why is a CMA set up with a Savings Gearing Loan?
By applying for Savings Gearing, you authorise us to open a CMA on your behalf. The CMA is opened in the name of Value Nominees Pty Limited, a wholly owned subsidiary of Westpac Banking Corporation.
This account is set up to collect part of the payment for your investments from your margin loan and the other part from your external bank account as per your instructions.
Your Fund Manager will draw on the CMA to make your total Monthly Investment.
Note: This CMA cannot be used for any other purposes, eg. Interest or Dividend payments.