A glossary of Hong Kong stock loan terms.

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.

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.

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.

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.

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.

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.

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.

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.

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.