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Netfonds offers loans for security purchases and lends securities for short sales. For both options, Netfonds demands adequate security in cash or in securities.
A credit agreement must be signed and mailed to Netfonds before you can take advantage of this offer.
It is required that the borrower uses his/her own capital to cover a part of the investment risk. Every loanable security is given a percentage which states the minimum capital requirement, which is updated daily.
Example: If you have NOK 50 000 and the capital requirement is 20 %, this means that 20 % of your total investment should be within your capital which is 50 000. Thus, your cannot trade for more than NOK 250 000 with this security.
An overview of capital requirements on securities can be found here.
Maximum loan amount and security requirements are calculated in the following manner:
Your loanable capital is the sum of the market value of your loanable securties and the balance on your client account minus market value of your lonable securities, pluss the cash balance on your client account, minus loans.
You can borrow money to purchase securities as long as a minimum capital requirement is fulfilled. When calculating the minimum requirement, loanable securities (with market value) are multiplied with the belonging percentage and summed up.
If the minimum security requirement is not fulfilled, Netfonds retains the right to cancel positions in order to ensure the security of the loan, without notifying the borrower.
If your capital decreases to 75 % of the minimum requirement, an e-mail reminding that your loan is without adequate security will be sent to you.
If your capital decreases to 50 % of the minimum requirement, an e-mail will be sent, informing that your loan is without adequate settlement, and that we will do a forced sale (or purchase, if you are short in a security, see under) of your securities.
Please notice that we retain the right to choose which securities to sell or purchase in order to ensure the loan's security.
In theory, the risk in short sales is unlimited as the price of a security can increase indefinitely.
Netfonds guarantees that the stocks will be delivered back to the lender.
Click here for an overview of shortable stocks