Short selling involves selling securities you do not own, which you aim to repurchase later at a lower price.
Most New Zealand and many Australian listed securities can be borrowed to facilitate short selling - subject to availability at the time of the request.
This service is provided by Leveraged Equities Finance Limited (LEFL).
Call us on 0800 627 446 to get started
Clients of LEFL can use this service. To join LEFL download and complete the client application form. Send us your completed form and we will set you up. You can also visit www.leveragedequities.co.nz
What is LE Shorts?
LE Shorts is a service that you can add to your LEFL account to enable short selling. It enables you to borrow certain securities from LEFL that you do not currently own and sell them on either the New Zealand or Australian Stock Exchange.
You must then repurchase the securities at a later date, with the aim of benefitting from a fall in the price of the securities borrowed.
Your return is the difference between the sale price and purchase price after deducting costs and any tax liability on trading profits. However, if the price of the borrowed security rises, then you will incur a loss.
Each loan of securities has a collateral requirement based on the securities borrowed less the sales proceeds from the short sale. The sales proceeds from the short sale are retained by LEFL on your account for the duration of the loan of securities and are not available to be paid out to you until the position has been closed out.
Why use an LE Shorts facility?
Investors who believe the price of a security is likely to fall in the short to medium term can earn a return if the expected fall occurs. Using LE Shorts, in conjunction with your LEFL account, gives you increased flexibility to make decisions that can protect the value of your equity.
Investors may offset potential losses on an existing investment portfolio in the event of a broad based market fall in security prices. This is a form of hedging against a downturn in economic/market conditions.
A situation may also occur where the price of one security is expected to fall, but another similar security is expected to increase. Investors might seek to take advantage of these views with an arbitrage opportunity.
Further information can be found in the Leveraged Equities Shorts Brochure.
For more information on and full Disclosure Documents for Leveraged Equities Finance Limited, please speak to your Investment Adviser or Leveraged Equities directly on 0800 627 446, or visit www.leveragedequities.co.nz.