My Portfolio

Monday, October 30, 2017

Rights Issue w SC bank

I've no experience with other brokerage houses in regards to rights issue, but so far Standard Chartered has offered a pleasant (though not perfect) experience.

You can check out this blog post for the pros and cons of SC in relation to rights issue.

After reading up on KPO's blog post and other posts, I've come to realize some interesting aspects of a rights issue.

Hack #1: Sell your rights and apply for excess rights

Sell your rights on the market - Get free cash
You apply (call SCB Hotline) for excess rights and request for NO odd lots given to you. (yay to no commission fee)
Cross your fingers and hope you get the ballot.

Selling of rights in the open market will incur commission fees.
Application of excess rights constitutes to exercising them as well, provided you have sufficient cash balance.

Hack #2: Buy rights to lower commission on new investment

Buy rights on the market - Incurring a (% commission) of the cheap rights (compared to the stock)
You (call SCB Hotline) to exercise the rights bought. (yay to no commission fee)

Check out KPO's blog post to understand how he did it.

Buying of rights in the open market will incur commission fees.
This Hack is more applicable for priority banking customer of SCB as there is no minimum fee imposed on them.
Can still be applicable if you intend to purchase more than $5000 worth of shares (will incur you more than $10 for SCB). In this case, you can purchase the equivalent number of rights and call SCB to exercise these rights into shares.