SVS Securities - shut down?

manorhouse

That was not the answer i logged on to see Alexland .
The facts are  with hindsight i was correct in buying the dips , maybe i should be giving you advise. ?

Alexland

manorhouse said:

The facts are  with hindsight i was correct in buying the dips

I was also buying into the dips by tilting my asset allocation into the opportunity.

manorhouse said:

maybe i should be giving you advise. ?

Thanks but I'm fine without taking margin call risks.

manorhouse

"I was also buying into the dips by tilting my asset allocation into the opportunity."
Much better then me investing new cash at 2% arp lol 

manorhouse

On the 20th March 2020 i topped up a holding i have in MWG ..
Been a stinker for me that one, but that top @ 0.45p using there money @ 2% arp  not a bad move up over 65% today 

My2penneth

Note the new message on the LC website.  They are giving a date for bulk ISA transfer of 8th June with account details sent out earlier.
https://www.leonardcurtis.co.uk/SVS/

"Notification of intention to transfer your Individual Savings Accounts (“ISA accounts”) 

In accordance with the ISA regulations we are writing to notify you at least 30 days in advance that we will be transferring your ISA accounts to a new ISA manager, as part of a bulk transfer of all ISA accounts from SVS. We refer to the distribution plan for the return of client assets by SVS (the "Distribution Plan") and accompanying explanatory statement circulated on 24 April 2020 in advance of the court hearing on 7 May 2020 to approve the  Distribution Plan. The Distribution Plan was approved by the court on 7 May 2020. On the basis, therefore, that your account is eligible for transfer (see the Explanatory Statement and the Distribution Plan for further details), your ISA account will be transferred to the Nominated Broker (the "Nominated Broker") on or around 8 June 2020.

bowlhead99

manorhouse said:

Thank you bowlhaed for giving some idea of how Degiro decided how much to loan me.
A better idea then i have had from them .
I do not know were you have got you figures from ?

I got them from the fact that when it happened, you told us, "Annoyingly at 9pm last night Degiro  sent a mail stating requirements for net investment risk will be raised to from 20% to 25%. Just as well i am not in indices which they are raising from 15% to 25%".

So, if the increased risk requirement for a portfolio holding only one investment type (e.g. shares) previously required you to have liquid cash and investments to cover a 20% adverse movement, but now it is 25%, you will need to have more cash and investments in your account to provide the cover, which may mean that if you have a large cash debit position (like an overdraft) you will have to top it back up. Still, 25% is pretty low.

It seems way out i think you might have it the wrong way around ? 
The fact is at the amount  they are willing to lend me just right now is 1/4 of my valuation  + 1.75%

If you are saying I have got that the wrong way round and the 'quarter' is the total amount of credit you can have, it wouldn't make sense for you to be complaining that the figure has gone up from 20 to 25%, if this 25% is a figure that represents how much credit you are allowed to have. 

When you talk about the amount 'they are willing to lend me just right now' you may be mixing different concepts together in your head and whether you are meaning a credit facility to place share orders that haven't settled yet or longer term margin borrowing.

With Degiro,  the limiting factor on the credit available for adding new securities without putting more cash in may be limited by either your margin (the excess of liquid investments and cash over your portfolio risk figure, where the portfolio risk figure depends on how diverse your portfolio is and what is in it, to withstand events relating to an individual security or sector or investment type), or by the credit facility offered (cash on hand and collateral value e.g. 70% of your investments can be used as collateral).

Which one is the limiting factor may depend on whether your account type is 'active account' or 'trader account' - the account type you've selected governs how you are allowed to use the account - which determines how much your gross portfolio risk is calculated at, and also how much of the theoretical margin you are allowed to use (how much 'debit cash' you can access). A 'trader account' is designed for people who only want to make limited use of margin - you are allowed less 'debit money'.  With the 'Active account' you would be assessed as the same or higher portfolio risk as a 'Trader account' and although your collateral would be calculated the same, the practical amount of credit you could get for a new unsettled purchase would be restricted by the fact that higher portfolio risk would result in you having a lower margin available. 

Degiro have some worked examples in their Risk Handbook (https://www.degiro.co.uk/data/pdf/uk/Investment_Portfolio_Risk_Handbook.pdf) which show how your portfolio risk will be higher than the 'net investment risk' figure of 20% (now 25% for equities) if you have a high concentration in individual stocks, or industry sectors (e.g. energy, pharma, financials), or obscure currencies, or investment types (e.g. stocks or funds vs bonds). There is also a separate explanation of the concepts in their Risk and Debit Money document at https://www.degiro.co.uk/data/pdf/uk/ISI_Security_Value_Risk_Debit_Money_Debit_Securities.pdf

I did not think there was a simple calculation which was my annoyance in those stressful days  i had no idea how much they would demand i pay back day by day it appeared 

If you are going to position yourself so that you've taken the maximum amount of credit possible, then it's quite feasible for you to need to put in more money to cover your margin exposure one day, then the next day the value of your assets falls again and you will need to put more money in again.  The amount of 'debit money' allowed is going to be a proportion of the total value of the assets which may continue to fall day by day. So although a portfolio of £5000 of shares has a lower 'risk level' than a portfolio of £10000 (because the event risk on a £5000 portfolio of a few stocks is lower than on a £10000 portfolio of the same stocks), you can't expect them to give you the same amount of 'overdraft' when you only have £5000 of assets instead of £10000.

When you were complaining about being embarrassed by having to borrow money from your niece to prevent a forced sale, you said "ironically i would of been ok as market dropped further". This may imply you simply don't understand this stuff... because if the market drops further, although the 'event risk' on any of the stocks feeding into the margin calculation will be lower in pounds (because you don't have a high value of stocks subject to market swings), but also the margin headroom is reduced (because you no longer have a high value of stocks that was supporting your borrowing!). When you are dealing on margin, I don't think you can say 'I would have been ok, as market dropped further'. Surely if market dropped further you would have been even less OK!   

For example if you had 1000 of an investment and -300 of debit cash, (giving 700 of liquid assets) they might be calculating your 'risk' requirement at 500, giving you a comfortable 200 of headroom. If the investment crashes to 500, the risk requirement might fall to 250 on that smaller portfolio, but unfortunately the 500 of investment and the -300 of cash gives you only 200 of liquidity against a 250 requirement, and you have to fund more margin by putting cash in from your back pocket or your bank.

If you are lucky then by the next day the market might recover to 600 with a 300 risk requirement, which is great because then you are back on the borderline without having needed to reach into your pocket. But even if you had reached into your pocket and paid in the minimum amount of cash to fix your account at that point, there is nothing to say that the market wouldn't have fallen further, or fall further the next day, causing another margin call.

And no prior warning. ( i think you or masonic said i had not read the small print maybe years before .. really )

When you don't give them your own money to buy all the stocks you want to buy, you are literally using their money to fund your portfolio.  They say, "In case you invest with Derivatives, Debit Money and/or Debit Securities it is important to remain continually aware of Security Value, Risk and the use of Debit Money and Debit Securities in your portfolio and to make timely adjustments to avoid intervention by DEGIRO". 

Their assessment of the risk of your portfolio is something that can change depending on the mix of what you hold (portfolio composition) or just general market issues. If you are using almost as much 'debit money' as you're allowed and then their assessment of your portfolio risk changes - whether for your customer type, or all customers -  you may become in breach of the limits, just like you might breach the limits if the market moved against you and the asset values fell causing the borrowing to become too much of a proportion of the total. In other words if they change their risk assessment for an asset class or an individual stock (e.g. rerate it from a category A to a B or C or D), this can change your margin requirement even if market values don't change, and you might need to react to that swiftly.

And if the reason they increased their margin requirements was because markets were falling at an unprecedented rate, you will get a double whammy of lowered asset values and increased margin requirements at the same time, which might be painful if you hadn't been keeping a close eye on the potential impact.  The fact that you opened your account years ago and have been using as much borrowing as you can ever since, doesn't absolve you of the responsibility to remember the small print about what factors affect how the available margin is calculated.

As i have said i believe they risk grade every share ( not all equal ) as i have so many i thought it a very difficult task to work out .

The various investments and derivatives of them are in different buckets according to how much risk their margin model attributes to them, equities are in buckets A to D for example.  The type of account (e.g. trader or active) that you use will impact what 'event risk' they assess for those different stocks when you are long or short on them, and how much debit money you can access, and so on. If you have hundreds of high quality stocks and bonds across a cross section of sectors you will have a lower 'risk funding' requirement than if your money was all in stocks, or all in one sector, or all in one stock.   

Still, the fact that the funding available is complex and may change from time to time doesn't mean you should just ignore it because it's 'difficult'. If they simplified it, they would be offering you less credit, or more expensive credit, as they're not going to use an overly simple model as the basis for lending out larger amounts of money. If you don't want to engage with the calculations yourself then you should either not take the credit or make sure you have a lot of headroom within the theoretical maximums you can borrow from time to time.

Many people using Degiro would just use their safest Custody account where you simply buy the investments you want with your own money and they hold them safely for you. Whereas a heavy trader like you buying new investments every single day might prefer to gear your investments up by having a debit money balance within your account at a low APR, and pay low fees because you are letting them lend out your stock to other third party market participants and make a side income for themselves from that, to give you the cheapest possible service and the greatest set of opportunities.

So then you will prefer one of their other accounts, like a trader, day trader or active account, and you won't worry about the gearing risk or the counterparty risk on the lending etc.  Perhaps a mix of wanting more features but putting your head in the sand about how they are practically delivered. But I expect most on this thread having got their shares back from the ashes of SVS after a year of waiting will not be too enthused by the idea of using the Degiro model for cheap geared trades.

And you wonder why i have a negative view of these types.
Can others inform me if this is this normal practice 

I do wonder why you max out the borrowing on your accounts and then complain that they are moving the goalposts while absolving yourself of any responsibility for being caught short because it was years since you read the small print and it seemed difficult to track the margin and risk levels so you didn't try. 

You say the amount of what they'll lend you at the moment seems to be a quarter of your portfolio value plus 1.75%, but you haven't read up on how it works, so are just jabbing numbers into a calculator and seeing that the figure is about 1.75% away from being a nice round quarter of the total.  Next month it won't be 26.75% it will be some other number (depending on investment mix, cash levels, transactions in progress etc), so it might be useful to you to look at the links to the pdf guides, which you can read in conjunction with the help and support pages of the site.

I expect you won't read them because they are lengthy and you are too busy, but your own lack of concern for what they contain doesn't mean you should have a negative view of Degiro or call them rogues (or rouges).

and did HSBC demand parts of loans back with 24 hours to deliver it to them 
Under treat of selling shares which ones i have no idea .
I guessed the largest holding but i do not like guessing .

I expect if HSBC offer margined trading they reserve the right to make short notice calls on margin and also change the margin levels, funding requirements or risk measures for different assets, just like any other broker does.

If they need to sell something to fix your account, like any broker their T&C will give them the right to sell or close positions or enter into new positions for your account to eliminate the deficit.

It may involve selling the largest and most liquid stock, but it might instead involve selling the less liquid ones or lower quality ones if the opportunity has arisen to do so and the goal of the exercise is to reduce the credit risk posed by your account which is in breach and you are not taking any action to do it yourself. If you are playing on margin you need to be ready to intervene at short notice to avoid direct intervention by the broker themselves. In extreme market conditions the brokers will take action to protect themselves and the T&C will authorise them to take those actions without saying exactly which stock they will choose to liquidate - the T&Cs by necessity only have quite general descriptions of the actions they can take, though they should be quite clear in when they can be taken.

Eastneuk

I missed the recent circulation (7th May) from LC which confirms that the Court has approved the distribution plan and that at least ISA’s will be transferred to the nominated broker early next month. I presume the balance of stocks will be transferred at about the same time along with our cash holdings. Maybe a light at the end of the tunnel?

manorhouse

Well that is good to read that we might not have to wait as long as last told.

As for Bowlhaed Thankyou a lot of work there .
I checked i do have a trader acc , ( when my son whose in the Army came home once we clicked his over to trader , he does not use there money so must of been some other advantage i ques, on the basic one .)
I only have shares , i have never gone short ( i was unaware you could do that )

You made me think how little i know , to make it clear i only used more of there money when markets collapsed recently, before that i had only used 50% of available but there  was no detailed calculation in that  .

I had thought that pretty safe ( the 50% buffer ) but not sure now after reading all that ( which i will have to read several times , as just read at speed ..... busy ).

I had thought with HSBC years ago the loan could be very handy when you get the 5% ft100  day falls you get from time to time.

Of course this one was "not normal " so to speak .
But no one knew anything .
You have made me think i am deluded to think i can make money from investing .
but my paper losses since the lows are 50% less .
I can not check my paper loss in SVS but that must of also come back with no extra buying/ dealing  ?
Must be a good bit of cash as a few corporate  actions couple of takeovers.
I can use that to pay my niece back .

manorhouse

Just got all the pets back for 219p and its my birthday   

manted

Happy Birthday Manorhouse !