Margin lending

Margin lending lets you borrow money to invest, using your shares or other approved securities as collateral. We provide a service that’s flexible with an extensive list of approved securities to borrow against.

How it works

The ASB Margin Lending service is a combination of a lending facility and Cash Management Account provided by ASB Bank, and the share trading services of ASB Securities.

You can borrow against a wide range of approved securities. Each approved security is assigned a lending ratio. The amount we are prepared to lend against a particular approved security can be calculated by multiplying its market value by its lending ratio. You can find the approved securities lists and their lending ratios online.

The facility is provided in New Zealand dollars and is attached to your ASB Cash Management Account. Your facility limit is the lesser of:

  • an amount which we may notify you of, and
  • the sum of the lending value of each individual approved security.

Your facility limit will therefore potentially fluctuate on a daily basis.

If you already own securities on our approved list, these can be accepted as security against your margin loan and used to satisfy the equity contribution required.

Using your margin loan facility

Once your facility has been approved and set up, you can start to use it by:

  • transferring cash; and/or
  • transferring your existing shares and other investment securities into the designated nominee as security for your facility.

We then calculate the facility limit which determines how much you can borrow. You can then use your funds available under the facility for business or investment purposes.

You decide:

  • what investments you make using the loan,
  • when you draw down or repay your loan - within your loan’s approved limits and conditions,
  • how much you borrow against the facility limit available to you, and
  • whether to pay interest as you go, or capitalise it to your loan.

Using Online Share Trading in addition to the above you can:

  • buy and sell shares within your facility limit, and
  • view information about your margin loan online at any time, including:
    - your current loan balance
    - online orders that have not yet traded
    - orders awaiting settlement
    - your facility limit
    - the balance of funds still available
    - any foreign currency balances you hold in your ASB Foreign Currency Account for share trading.

For more detail and examples on how margin lending works, read our brochure.

Benefits at a glance

  • Potential to build a larger investment portfolio
  • Place trades and view information on your margin loan at any time with Online Share Trading
  • Only pay interest on your daily loan balance - no interest charges if you don’t use your facility (fees will apply)
  • Free up the equity in your approved securities without needing to sell them
  • Potential to diversify across a greater range of securities, in different companies and industry sectors
  • Our extensive approved securities list provides you with a wide range of shares and other securities to borrow against

What are the risks?

In addition to the risks associated with investing in share markets, there are additional risks to consider with margin lending.

Market movements

Margin lending multiplies your opportunity for gains if the value of your investments rise. Conversely, it also multiplies your potential for losses, should the value of your investments fall. If the value of your share investments fall, this could result in a drop in the lending value that your portfolio supports, which could reduce your facility limit. This may mean you will need to reduce your loan balance at short notice.

Foreign currency movements

If securities that are issued in another currency other than New Zealand dollars are held as security and foreign exchange rates change, this could result in a drop in the lending value that your portfolio supports, which could reduce the facility limit available to you. This may mean you will need to reduce your loan balance at short notice.

Lending ratio changes

Lending ratios can be reduced, removed, or suspended against a particular security at any time, which could reduce the facility limit available to you. This may mean you need to reduce your loan balance at short notice.

Interest rate movements

If the margin lending interest rate increases, the overall financing costs of your investment may increase. This may potentially reduce your overall returns.

Negative impact on your equity position

The ultimate loss risk is if a company or companies fail(s) and you lose the full value of your shares, which could result in total loss of your equity and may result in a requirement for your loan balance to be repaid at short notice.

For more detail and examples of the risks regarding margin lending, read our brochure.

What happens if I exceed my approved limit?

If your facility limit is exceeded, we will provide you with some flexibility before we will require you to bring your facility back within approved limits. Your margin loan will be permitted to exceed the overdraft limit by up to 4.99%. We call this a margin buffer. It is important to note that the margin buffer is set to provide flexibility against day to day fluctuations in the market (under normal levels of volatility). It is not sufficient to prevent margin calls (as explained below) from occurring.

A margin call will occur when your loan balance exceeds your facility limit by 5% or more. You will then be required to bring your facility back to within its approved facility limit before 2pm (NZT) the following business day.

Failure to do this will result in us selling part or all of your securities to bring your margin load back within its approved limit. Our process for doing this is set out in full in the ASB Margin Lending Terms and Conditions. Because margin calls are typically made when the value of your investments are declining, you may be forced to sell your holdings at a lower price than you would like.

The possibility and consequences of a margin call are something every investor must consider when using margin lending.

Should I consider an ASB Margin Lending facility?

Margin lending is for investors who actively monitor and manage their investments. Only if you are comfortable with taking on an additional level of risk (over and above the risk that already exists with investing in the share market) should you consider applying for an ASB Margin Lending facility.

As this type of investment tool is not for everyone, before you apply, we recommend you carefully read our brochure in full, together with the terms and conditions and risk disclosure statement. You should also obtain independent legal and financial advice to gain a better understanding of the risks involved in margin lending, and ways in which to manage those risks.

Rates and fees

Margin lending interest rate

Interest is calculated on a daily basis, in relation to the amount borrowed under the facility and is charged to your ASB Cash Management Account on the last day of each month.  The interest rate is a floating rate and subject to change at any time. For credit balances, relevant ASB Cash Management Account rates apply.

Stock transfer fee

To add or release shares and approved securities where there is no change in underlying beneficial ownership to and from your portfolio held as security for your margin loan. Release will depend on whether there are sufficient holdings remaining in your portfolio to fully secure your margin loan.

*A stock transfer fee where there is a change in underlying beneficial ownership may vary. We will advise you of any additional fees at the time of your request.

Margin call fee

If your loan balance exceeds your facility limit by 5% or more.

Nominee fee

Fees for the nominees service (ASB Nominees Limited) are charged six months in arrears, directly to your ASB Cash Management Account.

If you are a margin lending customer, the nominee fee will be waived if the interest accrued is greater than $400.00 in the preceding six month period.

Termination fee

This fee covers the cost of transferring your share investments out of the nominee. The total depends on the number and complexity of your holdings, but we can let you know the cost beforehand. 

Next steps

Apply now

Download the Margin Lending application form to get started. Note all trustees, individual and joint applicants must also complete the Margin Lending Declaration for the purposes of the CCCFA.

Download form

Enquire now

Email us if you'd like help to get started.

Email us

Call us

Contact the ASB Securities team from 7am to 6pm NZT, Monday to Friday.

0800 272 732

+64 9 448 8120

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NZX Firm logo

ASB Securities Limited is an NZX firm. When you trade on the NZX markets through ASB Securities you must comply with NZX rules as outlined in the ASB Securities Trading Conduct for Online Share trading. ASB Securities terms and conditions apply. Pricing data supplied by ASX and/or NZX. ASB Margin Lending is provided by ASB Bank Limited and managed by ASB Securities Limited. ASB Cash Management Account, ASB Foreign Currency Account and ASB Term Deposits are provided by ASB Bank Limited. ASB Bank's lending criteria and term's apply. Rates and fees may change. Refer to asb.co.nz for other fees and charges. This page does not have regard to the financial situation or needs of any reader. As individual circumstances differ, you should seek appropriate professional advice. See the ASB Securities glossary for share trading and investment terms or Morningstar for research terms. All Margin Lending applicants must be over 18 years of age. Margin lending facility must be used for business or investment purposes.

ASB SecuritiesMargin lending