A glossary of Hong Kong stock loan terms.

Each entry below gives a plain-language definition of one term used across this site, with its own link anchor so that other pages can cite it directly.

Stock Loan (Securities-Backed Loan)

A financing transaction in which a shareholder pledges listed shares as collateral to raise cash while retaining beneficial ownership and the right to recover the position on repayment. Also called a Lombard loan or share-backed loan. See Stock Loans, and how it differs from securities lending and an SBLOC.

Lombard Loan

Private-banking term for a loan secured against liquid financial assets such as listed shares. In the Hong Kong context it is used interchangeably with a securities-backed stock loan.

Loan-to-Value (LTV)

The ratio of the loan amount advanced to the market value of the pledged shares. It is the single most consequential structural variable and is set case by case with weight given to liquidity, volatility, and concentration; no generic grid is published. See which HKEX stocks can be pledged and the indicative advance calculator.

Recourse

The extent to which a lender can pursue the borrower's wider assets beyond the pledged shares on default. A stock loan may be structured non-recourse, limited-recourse, or full-recourse, and the choice drives pricing. See recourse profiles.

Margin Call

A demand for additional collateral or repayment when the value of pledged shares falls below an agreed threshold. Standing margin-call exposure is a defining feature of broker margin financing and is what a well-structured stock loan is designed to manage or avoid. See how the routes compare, and the SFC margin-financing rules that bind brokers.

Block Trade

A large, privately-negotiated transaction in a listed security, executed off-screen to minimise market impact and reported to HKEX under the applicable rules. Used for permanent monetisation of a substantial position. See Block Trades.

HKEX (The Stock Exchange of Hong Kong)

Hong Kong Exchanges and Clearing Limited operates The Stock Exchange of Hong Kong Limited (SEHK), the primary listing and trading venue for Hong Kong–listed equities, comprising the Main Board and GEM.

Securities and Futures Commission (SFC)

Hong Kong's independent statutory regulator of the securities and futures markets. It administers licensing under the Securities and Futures Ordinance and the Codes on Takeovers and Mergers and Share Buy-backs.

Securities and Futures Ordinance (SFO, Cap. 571)

The principal Hong Kong statute governing securities and futures activity, including licensing of regulated activities, market conduct, and the Part XV Disclosure of Interests regime.

SFO Part XV — Disclosure of Interests

The regime under Part XV of the Securities and Futures Ordinance requiring substantial shareholders (generally at a 5% interest) and directors to disclose interests and short positions in HKEX-listed companies. A pledge or its enforcement can crystallise a filing obligation. See SFO Part XV disclosure.

Substantial Shareholder

Under SFO Part XV, a person holding an interest (broadly) of 5% or more in the voting shares of a listed corporation. Reaching, crossing, or falling through the threshold triggers a disclosure obligation.

Controlling Shareholder

Under Rule 1.01 of the HKEX Main Board Listing Rules, a person or group entitled to exercise or control the exercise of 30% or more of the voting power at general meetings, or able to control the composition of a majority of the board. The 30% figure follows the level at which the Takeovers Code requires a mandatory general offer. See Listing Rules 13.17 and 13.18 on controlling shareholders' pledges.

Qualified Lender

Under SFO Part XV, a lender such as an authorised financial institution, an authorised insurer, an exchange participant or a firm licensed for dealing in securities or securities margin financing. Creating a security interest in its favour does not change the nature of the holder's interest for disclosure purposes. A licensed money lender is not, on that basis alone, a qualified lender.

Codes on Takeovers and Mergers

The non-statutory codes administered by the SFC that govern takeovers, mergers, and share buy-backs of public companies in Hong Kong. A change in control or a threshold crossing can engage the mandatory-offer and dealing provisions. See also financing a share buyback program.

General Offer (Mandatory Offer)

An offer to acquire all the shares of a company, or of a class, other than those the offeror already holds. Under Rule 26 of the Takeovers Code, a person who acquires 30% or more of the voting rights, or who holds between 30% and 50% and increases that holding by more than 2% from its lowest point in the previous 12 months, must make a mandatory general offer unless the SFC Executive grants a waiver. See pledged HKEX shares in a takeover or privatisation.

Whitewash Waiver

A waiver by the SFC Executive of the mandatory general offer that an issue of new shares, including through underwriting, would otherwise trigger. It is normally granted if independent shareholders approve the waiver by at least 75% and the issue by more than 50% of the votes cast, and the applicant has made no disqualifying dealings. See paying for a rights issue or open offer with a stock loan.

Scheme of Arrangement

A court-sanctioned arrangement between a company and its members which, once approved and registered, binds all of them. In a privatisation it cancels or transfers the shares not held by the offeror. The Takeovers Code adds its own approval test (Rule 2.10), and for a Hong Kong company the Companies Ordinance (Cap. 622) sets the court process.

Compulsory Acquisition

The statutory right of an offeror that has acquired, through acceptances, at least 90% of the shares its offer relates to, to buy the remaining shares on the offer terms. For Hong Kong companies it is set out in sections 693 to 698 of the Companies Ordinance (Cap. 622), and the Takeovers Code also requires 90% of the disinterested shares (Rule 2.11).

Irrevocable Undertaking

A shareholder's binding promise, usually given before a transaction is announced, to accept a takeover offer, vote for a scheme, or take up an entitlement in a rights issue or open offer. The Takeovers Code calls it an irrevocable commitment and requires disclosure of when it ceases to bind; the Listing Rules require a statement on substantial shareholders' undertakings where an issue is not fully underwritten.

HKEX Listing Rules

The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, which set the continuing obligations of listed issuers, including disclosure of inside information and specified corporate actions.

Model Code (Appendix C3)

The Model Code for Securities Transactions by Directors of Listed Issuers, Appendix C3 to the HKEX Main Board Listing Rules (Appendix 10 before 31 December 2023). It restricts when directors may deal in their issuer's securities and requires clearance before dealing. Its definition of dealing includes creating a pledge, charge or other security interest over those securities. See directors, the Model Code and pledging HKEX shares.

Black-out Period

A period in which the Model Code bars directors from dealing in their issuer's securities unless the circumstances are exceptional: the day results are published, the 60 days before annual results, and the 30 days before half-year or quarterly results (or from the period end, if shorter). HKEX's FAQs use the term; the Code itself does not.

Rights Issue

An offer by way of rights to existing holders of securities that lets them subscribe for new securities in proportion to their existing holdings (Main Board Rule 7.18). The rights are renounceable and trade as nil-paid rights until the subscription deadline.

Open Offer

An offer to existing holders to subscribe for new securities, whether or not in proportion to their holdings, which are not allotted on renounceable documents (Main Board Rule 7.23). Unlike a rights issue, the entitlement cannot be traded.

Nil-Paid Rights

The renounceable entitlement to subscribe for new shares in a rights issue, issued on provisional allotment letters and traded on the Exchange as temporary securities before the subscription deadline. The acceptance period must be at least 10 business days (Main Board Rule 7.20).

HKSCC (Hong Kong Securities Clearing Company)

The HKEX subsidiary that operates CCASS, the central clearing and settlement system for Hong Kong securities. HKSCC acts as central counterparty and, for Northbound Stock Connect, as nominee holder.

CCASS (Central Clearing and Settlement System)

Hong Kong's book-entry system, operated by HKSCC, in which most HKEX-listed shares are held and settled. Positioning a pledged holding within CCASS is part of the operational mechanics of a stock loan.

HKSCC Nominees

HKSCC Nominees Limited, the HKSCC company recorded on issuers' registers as the legal owner of shares held in CCASS. Investors who hold through a broker or custodian have a beneficial interest rather than legal title. See moving HKEX shares into custody.

Settlement Instruction (SI)

The instruction that each of two CCASS participants inputs to move shares between their CCASS stock accounts. CCASS matches the pair and settles them free of payment or against payment; instructions input and authorised before 3:45 p.m. can settle the same day.

Uncertificated Securities Market (USM)

Hong Kong's regime, starting on 16 November 2026, under which listed shares can be held and transferred in the holder's own name without paper certificates, through an approved securities registrar. Existing issuers must join within five years of launch, and existing certificates remain valid. See what the USM changes for pledged HKEX shares.

Bankruptcy-Remote Custody

A custody arrangement designed so that pledged shares are insulated from the insolvency of the custodian or an intermediary, protecting the parties' respective interests for the life of the facility.

Beneficial Ownership

The economic ownership of shares — the right to their value, dividends, and any recovery — as distinct from bare legal or nominee title. In a stock loan, beneficial ownership is retained by the borrower while the shares are pledged.

Free Float

The proportion of an issuer's shares held by the public and available for trading, excluding locked-up or strategic holdings. Together with average daily traded value it is a core input to whether, and at what LTV, a stock can be financed.

Average Daily Traded Value (ADTV)

The typical daily turnover in a stock, measured in value. Thin ADTV signals that a position cannot be liquidated quickly without moving the price, which widens the haircut and lowers the indicative LTV band.

Chapter 18A

The HKEX Listing Rules chapter permitting pre-revenue biotech companies to list. The binary, milestone-driven risk of such issuers means they are financed far more conservatively, with a wider haircut and a lower indicative LTV band. See Chapter 18A & 18C stock loans.

Chapter 18C

The HKEX Listing Rules chapter for Specialist Technology Companies, allowing pre-commercial technology issuers to list under adapted eligibility and disclosure requirements. Treated cautiously as collateral for similar reasons to Chapter 18A.

Stock Connect

The Shanghai–Hong Kong and Shenzhen–Hong Kong mutual-market-access programmes. Southbound holdings are interests in HKEX-listed securities; Northbound holdings are Mainland A-shares held through HKSCC as nominee, which shapes how a security interest is documented and enforced. See Stock Connect shares as collateral.

Professional Investor

A category of investor defined in Schedule 1 to the Securities and Futures Ordinance and its subsidiary rules, to whom certain securities activities and communications may be directed. This firm's services and content are directed exclusively at Professional Investors.

Stamp Duty (Cap. 117)

Hong Kong duty charged on stampable transfers of Hong Kong stock under the Stamp Duty Ordinance. Whether a pledge (which preserves beneficial ownership) attracts duty, as opposed to an outright transfer, is a fact-specific question for the holder's own adviser. See stamp duty & tax treatment.

HIBOR (Hong Kong Interbank Offered Rate)

The HKAB HKD Interest Settlement Rates: the estimated rates at which Hong Kong dollar deposits are offered to prime banks, published at 11:15 a.m. each Hong Kong business day for eight tenors from overnight to 12 months. The Hong Kong Association of Banks owns the benchmark and the HKMA administers it. See how HIBOR shapes the cost of a Hong Kong stock loan.

HONIA (Hong Kong Dollar Overnight Index Average)

A volume-weighted average of overnight unsecured Hong Kong dollar interbank lending transactions arranged through a panel of money brokers. The HKMA administers it and has identified it as an alternative to HIBOR, while saying there is no plan to discontinue HIBOR.

SOFR (Secured Overnight Financing Rate)

The US dollar overnight rate, administered by the Federal Reserve Bank of New York, that replaced US dollar LIBOR as its alternative reference rate. The remaining US dollar LIBOR settings ceased after 30 June 2023. See multi-currency stock-backed facilities.

Linked Exchange Rate System (LERS)

Hong Kong's currency board system, in place since 17 October 1983, which keeps the Hong Kong dollar within HK$7.75 to HK$7.85 per US dollar. The HKMA's convertibility undertakings at those levels work through the Aggregate Balance, so Hong Kong dollar interest rates adjust automatically to capital flows.

These definitions are educational and general; they are not legal, regulatory, tax, or investment advice, and they simplify concepts that are fact-specific in application. Regulatory descriptions refer to the named Hong Kong regulators and statutes but are not a substitute for the primary sources or for your own Hong Kong counsel. See our editorial standards and disclosures.