The risks, stated plainly.
A stock loan is secured credit: powerful, but not without risk. The points below set out the principal ones. They are not advice, and not an exhaustive list.
The value of the pledge moves.
The pledged stock can fall, sometimes sharply and quickly. A decline reduces cover and can trigger a margin call or early repayment.
A fall can force a sale.
If the collateral value drops below agreed thresholds, a top-up may be required; failing that, the pledged shares may be liquidated, possibly at an unfavourable time.
The recourse profile changes the outcome.
Under a non-recourse, limited-recourse or full-recourse structure, the consequences of a default differ — from loss of the collateral alone to personal liability. Understand the profile you choose.
Currency, custodian and counterparty.
A cross-currency structure carries FX risk. Your shares are held with a qualified custodian under bankruptcy-remote arrangements; counterparty and custodian risk nonetheless remain.
Not advice, not a commitment.
A pledge or title transfer may have tax consequences; take your own advice. Indicative terms are not a commitment: only signed, definitive documentation binds.
Questions on the structure?
We walk through the mechanics and the risks specific to your position before any commitment.