It is an investment product that allows ANB Invest Customers to obtain credit facilities to buy and sell in local shares, whether conventional or Shariah compliant. The Company lends the Customer and allows him to trade in the Saudi Stock Exchange against pledging the shares and funds held in his investment account, taking into account the coverage ratio, which represents the market value of the shares (according to the company's rating), pledged or deposited by the client compared to the amount used.
The following example illustrates the effect of buying on margin on the client's investment account in a favorable stock market scenario:
1) Without Margin Trading product
If the value of the investment portfolio is SAR 1,000,000, the Customer can buy 10,000 shares at a price of SAR 100 per share. If the share price increases by 20%, the Customer will make a profit of SAR 200,000.
2) With Margin Trading product - 1 to 1 Margin Ratio
If the Customer obtains the Margin Trading product, his purchasing power will double and the value of his investment portfolio will be SAR 2,000,000 (SAR 1,000,000 from the client's portfolio + SAR 1,000,000 margin trading facility, lent from the company) giving him the ability to buy 20,000 shares. Earnings will be double at SAR 400,000 (excluding fees and commissions).
Margin Trading Strategy
The investor uses Margin Trading to increase his/her purchasing power in order to improve returns on his/her investments. Accordingly, the investor expects an increase in the price of the stock he wants to buy on margin. Thus increasing profits by increasing purchasing power gained from the credit facility.
Margin Trading Benefits
- To get a financing margin against stocks value and/or cash.
- To pay down your loan, you can deposit cash or sell local stocks available in your investment portfolio at any time.
- Competitive prices and commissions.
- Once approved, you can start trading on margin immediately.
Margin Trading Requirements
To fulfill the requirements and submit the following documents:
- Open an investment account
- Fill the Margin Request Service Form
- Sign the Margin Trading Agreement and any other agreements related to the services
- Attach previous trading statements (If available).
- Transfer the collateral to get the Facility (cash or stock).
To get this product, kindly visit our nearest Investment Center. ANB Invest current Customers may fill the Margin request form through ANB Invest Tadawul Website at https://e.anbinvest.com.sa by clicking "Margin Trading Request" on the upper left corner of the screen and filling in the requested data. You will be then contacted directly by the Marketing and Client Relations Division.
Margin Trading product carries a high degree of risk: if the stock value of the investment portfolio decreases, the Customer would be:
- exposed to a higher risk and volatility
- called for cash/stock deposit or stocks liquidation if the value of the investment portfolio decreases to a predetermined level.