Important Concepts

Equity Ratings

Equity Ratings

Equity ratings are measure of the stocks’ efficiency, which is provided as collateral against margin financing. The equity rating declines as the quality of the purchased shares or the intended shares falls. Certain stocks aren’t usually considered for financing.

In addition, investment firms rate all listed shares based on historical performance. Margin clients can utilize the margin provided to them based on the rating of each company.

Example:
If your capital is SAR 1 million and you receive a margin of SAR 1 million (maximum buying power becomes SAR 2 million), and you intend to buy a stock with a rating of 60%, you may use 60% of the maxium buying power to buy the share (SAR 1.2 million). If you don’t buy into the stock using the maximum buying power (SAR 1.2 million), you will still be able to use the remainder of the buying power (SAR 800,000) to buy stocks with 100% rating, use SAR 400,000 to buy stocks with 80% rating, or a combination of both. It is important to note that if you use the maximum buying power to buy stocks with 60% rating. You will not be able to buy any other stocks with 60% rating or less.

Derayah’s margin clients may view the latest version of Equity Ratings by logging into their portfolios on Derayah’s website.

Important Concepts

Concepts that interest you about financing, margin ratios, and stock valuation
Initial Margin Ratio
It is the ratio of the client's capital to the total value of the portfolio (including margin) at the time of receiving the margin.
Ratio for (1:1) Client
At inception, the ratio is 50% of the total portfolio value.
Result
In case of profit, the client can transfer any profit that exceeds the initial capital
Maintenance Margin Ratio
Is the ratio of the client's capital to the total value of the portfolio (including margin) that if reached, will lead to the reduction of the client’s buying power.
Ratio for (1:1) Client
The maintenance margin begins once the ratio of the client’s capital to the total portfolio value reaches 40%.
Result
The Client’s buying power declines according to the decline proportion of the total value of the portfolio.
Margin Call Ratio
When the ratio of the client's capital to the total portfolio value falls to 30%.
Ratio for (1:1) Client
The maintenance margin begins once the ratio of the client’s capital to the total portfolio value reaches 40%.
Result
The Client’s buying power declines in proportion with the decline in the total value of the portfolio.
Liquidation Ratio
The liquidation ratio is the ratio in which the client’s capital to the total portfolio value reaches a point where some or all of the client’s positions will be liquidated.
Ratio for (1:1) Client
When the ratio of the client's capital to the total portfolio value falls to 25%.
Result
Some or all of the client’s positions are liquidated immediately without referring to the client.

Frequently Asked Questions

You can browse frequently asked questions about this service.

If your question is not available here, You can contact us.

What is the T+2 settlement period?

The security settlement means transferring the executed security from the seller’s investment portfolio to the buyer’s investment portfolio. Cash settlement also means transferring the price of the security whose transactions have been executed from the buyer’s investment account to the seller’s investment account with the members of the market. More details about it can be found via the following link from the Tadawul website. Settlement in the Saudi market: https://www.tadawul.com.sa/wps/portal/tadawul/knowledge-center/about/settlement-cycle?locale=ar

What are fractional shares?

Trading fractional shares allows you to invest in companies, when you cannot afford the full share price.

It also makes it easier for you to diversify your portfolio by allowing you to purchase fractional amounts in multiple companies when you otherwise may have only been able to purchase whole shares in one or two companies. If you enable your account to trade in fractions, you will buy or sell a fraction of a share based on the amount of cash you specify.

For example, if you want to spend $500 but one share of the stock you want to buy is currently at $1000 you would end up with 0.5 shares.

Please note that fractional shares are not tradable after/before US market regular trade hours.

What are the investment fund options and how many are there in the platform?

The “Derayah platform” provides the possibility of subscribing and redeeming more than 70 diversified investment funds in terms of fund manager, fund type, performance and risk level. Making the appropriate investment decision, and all of these services are available electronically without the need to submit paper documents or visit the branch.

What is the minimum amount for DPM?

The minimum amount for portfolio management is 20 million Saudi riyals.

When I am entitled to dividends for the shares I own, where are they deposited?

All dividends due for all markets are added to your investment portfolio with Derayah Financial

Still need some help?

If you have some questions or comments, feel free to let us know and we will respond as quickly as possible