Good news! We have recently enhanced our platform to allow investors to borrow funds to buy non-marginable securities using existing marginable securities in your account as collateral.
You can borrow up to the value of your excess equity.
Excess equity (aka excess collateral) is the collateral value of securities and cash in the account that is over and above the 50% minimum equity percentage required to secure all outstanding loan.
Here are some examples:
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A margin account with P100,000 marginable security, no loan and no available cash has excess equity of P50,000 (computed as 50% of P100,000). The investor’s equity percentage at this point is 100% (computed as P100,000 ÷ P100,000). The investor may borrow up to P50,000 to buy a non-marginable security. If investor borrows full amount of P50,000 to buy non-marginable securities, this will reduce the investor’s equity percentage to our minimum requirement of 50% [computed as (P100,000 collateral – P50,000 debt) ÷ P100,000 collateral]. Note that non-marginable securities have zero collateral value.
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A margin account with P50,000 marginable security, P25,000 non-marginable security, no debt and no available cash has excess equity of P25,000 (computed as 50% of P50,000 marginable security). The investor may borrow up to P25,000 to buy non-marginable security and still comply with minimum equity percentage of 50% [ computed as (P50,000 collateral –– P25,000 debt ) ÷ P50,000 collateral].
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A margin account with P50,000 marginable security, P25,000 non-marginable security, P10,000 loan and no available cash has excess equity of P15,000 (computed as 50% of P50,000 collateral minus P10,000 loan). The investor may borrow up to P15,000 to buy non-marginable security and still comply with minimum equity percentage requirement of 50% [computed as (P50,000 collateral – P25,000 loan) ÷ P50,000 collateral].
The platform computes and displays the amount of excess equity, so you don’t have to worry about the computation.
Please be reminded that you must maintain a minimum equity amount of P50,000 when buying non-marginable securities.