The Macquarie Prime program provides lending options, cash management, internet trading and strategies to manage risk.
If you are looking for an individualised, online system that allows the total integration of financial services for investors over the long term – as well as for those interested in active trading – then you could consider the Macquarie Prime online share trading account. This service offers a combination of services to help you manage every aspect of your investments.
The Macquarie Prime program allows you to complete trades of contract for differences (CFDs), Exchange Traded Fund (ETFs) and shares, or to borrow your investments on a single online platform. Macquarie Prime also includes functional tools for risk management and allows you to chart your investments with up-to-date financial analysis on a single internet platform that requires the use of only one password.
CFDs are included as an integral part of the Macquarie Prime product. This means that you can trade with CFDs using all its services, tools for risk management, gearing and cash management. Your CFDs and share positions can be held and transacted via the online platform. This integration offers you the advantage of margin offset.
What are the features of the Macquarie Prime Online Share Trading account?
With Macquarie Prime you can complete Internet trades on a platform that provides more than two thousand securities listed on the ASX. When you purchase shares, they are registered in your Holder Identification Number (HIN) which is allocated to the account holding the shares you own in long positions. This allows you to get the ownership rights of the shares, which may include dividends, the right to vote on corporate decisions or franking credit.
There is a table which lists the shares available on the Macquarie website, showing both the presently available shares and any pertinent margins to be considered. For example, it will display whether you can order a ‘Stop Loss’, or whether you can create a short position.
If you wish to have a stock included on the Macquarie shorting list, you can simply contact Macquarie and request this. Of course, it must be noted that the shorting list for shares may change from time to time. If you have any queries regarding the shorting list or other related information, feel free to contact customer service. Note that clients’ maximal gearing rates will be eligible for the required margin related to a specific position and there could be variations according to the share itself.
Another option offered by Macquarie Prime gives you the opportunity to borrow money for investment, known as ‘gearing’. This is not mandatory, of course and you can choose to turn the loan option off or on, depending on your strategies. Macquarie Prime is able to provide loans for as many as 750 securities found on the ASX.
It is also possible to determine the gearing level: if you choose to use loaned assets to purchase shares you can also make a choice regarding how much of your own money you wish to utilise. This allows you to decide on the level of gearing that fits your personal situation; you can select any gearing level between 0% and 95%.
You can transfer loans and current shares you have in order to take full advantage of any opportunities for further investment that come up. You also do not have to sell any of your existing shares. If you have a loan that is against your portfolio you can possibly refinance the loan using ‘Macquarie Prime Facility’.
An offset account for you
Any gains that you have made when you short sold shares will generate revenue that can be placed into an account which is your ‘Funds Balance’. This account will allow you to reduce any interest you will have to pay if you borrow funds in order to invest in the shares. This is highly efficient because your interest is calculated on the cash that is in your ‘Funds Balance’ in your Prime account. This takes into account your long positions that have been purchased through the loan facility and the short positions. Having both the long and short positions in your portfolio reduces your interest charges.
Gearing or borrowing to invest
When you ‘gear’ or borrow to invest, you can increase your wealth exponentially. This has been a popular method for a long time in the Australian property market. For instance, you can place a deposit on a house but borrow the balance in order to make the purchase. You can do this in the financial markets as well. Gearing is very popular and investors are able to gain exposure to a share or a security without much of their own cash.
You also have the optional loan facility. This allows you to take advantage of investing more than just the ‘750-ASX’ securities. You can also decide how much of your own money you want to put forward and how much you want to borrow. Your gearing level can go from nothing to up to 95%, depending on your own investment decisions.
You are able to meet the necessary margin requirements by the shares that are purchased through the loan facility, but you can deposit more funds into the Prime account which allows you to reduce your level of gearing. Your gearing level is calculated by the ratio of your Funds Balance compared to the value of the long share positions you hold. During the term in which you have the GSL protection, you are protected no matter what happens to the share price.Back to top
Protection through ‘Guaranteed Stop Loss’ (GSL)
Macquarie’s Guaranteed Stop Loss (GSL) plan protects clients from unpleasant surprises that could occur with share pricing changes throughout a GSL time period. When you have a GSL in place, this functions as a guarantee that you will have a ’worst case scenario’ price for the sale of a CFD position. This offers clients protection from higher losses, showing how GSL time lets clients optimise the leverage of their portfolio.
Traders who are buying shares are ‘going long’ as they expect an increase in their value in the future. They purchase the shares and then sell them at the new higher price.
Case Study 1
Let’s assume you want to buy XYZ’s shares for $26.50 a share. You think that they are below value and that the price will go up soon. So, you buy 1000 shares.
When you see that the price has risen a couple of dollars, you decide you want to sell your shares. You have successfully acquired a gain in your long position.
This is ‘Gross Gain’:
- (Sale Price minus Purchase Price) x Quantity
- (28.50 - 26.50) x 1,000
This example, however, does not include interest, taxes or any fees. If you sell shares that are not yours, that means you are “going short”. Traders can seize an opportunity if it arises because of a price that has fallen using short positions. With Macquarie, you are able to take short positions in the shares through “borrowing”. These are Macquarie’s shares that you are allowed to sell in order to have the funds you need. If you think that a share is doing to drop then you can “short sell” the shares at their current (entry) price. You have the intention, however, of buying back the share when the price goes down in the future.
Case Study 2
Let’s say you want to sell after closing on your long position. You see that company ABC has shares at $29.00 that are priced too high. You want to take a short position and sell your 1,000 shares of ABC. After a couple of weeks, ABC’s share price falls to $28.00 and you decide to buy the shares back. This is an illustration of your gain.
Macquarie Prime gives you the flexibility and protection you need in order to make your online trading more successful and more profitable.