Lending stocks to promote stock sea leasing companies/charterers

        Do you invest in stocks through long-term holding? Do you know that besides receiving dividends, you can also lend your stocks to others to earn additional interest income? As for how to lend? Will it affect ex dividend rights? This issue of 'Finance Column' takes you through the process of understanding the door in one go.

        The formal term for lending stocks is "borrowing securities", which belongs to securities lending. The securities firm is responsible for the intermediary matching transactions, allowing the "person who wants to borrow stocks (borrower)" and the "person who wants to lend stocks (lender)" to trade at a mutually agreed interest rate, and paying and collecting interest according to the number of days of lending. The securities firm charges about 30% of the transaction fee (negotiable) from it.

        According to the current securities lending system, a listed OTC stock or ETF can be lent out. If you hold emerging OTC stocks, unlisted stocks, or zero shares, you cannot lend them out. However, in order to provide opportunities for small investors to lend securities and improve the efficiency of the use of zero shares, the stock exchange announced on July 18th that the lending units for securities with open delivery requirements can be zero shares, and this will be implemented from December 30th, which can be regarded as a blessing for the small bourgeoisie.

        1、 How to become a stock charter company? (Qualification for participating in coupon borrowing)

        1. Open a securities account for at least 3 months.

        2. Sign the securities lending account contract and participate in lending on the next working day.

        3. The trading hours are from 9:00 am to 3:30 pm.

        2、 Advantages of borrowing coupons

        1. Activate shareholding.

        2. Increase income and also charge interest on holidays.

        3. Freely determine the rate (0.1-16%).

        4. You can apply for recall at any time without paying any penalty, with high flexibility.

        5. Exemption from supplementary premiums, participation in ex rights dividends, and subscription rights for new shares are not affected.

        3、 Disadvantages of borrowing coupons

        1. Due to the fact that the recall still requires operational time (fastest T+1 day, slowest T+6 days), it is not possible to sell stocks at any time, which is not suitable for short-term investors.

        2. Loss of voting rights at shareholder meetings and inability to receive shareholder meeting souvenirs.

                4、 Calculate lending income

        Example: Xiaohua lent 100 shares of A stock at an annual interest rate of 3% for 30 days. The average closing price of the stock during the lending period was NTD100, and the brokerage fee was 30%. What is the total amount of lending income?

        Lending income=number of lent shares x daily closing price x transaction rate ÷ 365 x number of lending days

        =(100000 shares x NTD100 x 3% ÷ 365 days) x 30 days=NTD24657

        Lending cost=brokerage fee of 30%+withholding tax of 10%=NTD24657 × 40%=NTD9862 (if the interest income is less than NTD20000, there is no need to consider the 10% withholding tax)*

        Net lending income=NTD24657- NTD9862=NTD14795

        The net income mentioned above is the passive income created by investors by lending stocks for 30 days. If lent for one year, there will be NTD14795 × December=NTD177540.

        In addition to stock holders, those who hold high performing stocks and are unwilling to sell them can also use lending stocks to reduce losses. For example, if a stock is locked up at a rate of 5% and the annual borrowing and lending rate for stocks is 3%, and the stock price remains unchanged, the cost of one year's lock up is only 5% -3%=2%.

        However, if you want to become a stock sea charter company/landlady, you still need to pay attention to the rate setting. If the rate is set too low, you may not make money, and if it is set too high, you may not be able to lend out. It is recommended to refer to the historical borrowing transaction information announced by the stock exchange and set the expected lending rate slightly lower than the demand rate, which will make it easier to close deals. In short, lending stocks is a way for lazy people to manage their finances, as there is no need to view or sell stocks. Idle inventory assets can not only receive stable dividends, but also easily create additional income!

        *Historical borrowing transaction information announced by the stock exchange: https://www.twse.com.tw/zh/products/sbl/disclosures/t13sa710.html

        *The Ministry of Finance stipulates that lending income belongs to "rental income" and must be declared for income tax. If a customer's single lending income exceeds NTD 20000, the securities firm shall withhold 10% income tax in accordance with regulations. When the customer declares income in the following year, the deduction can be made.

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