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Why do I have a lock on the amount of withdrawals I can make when I have an active EasyCredit loan?

A withdrawal lock is applied based on the value of the qualifying investments that have been pledged for you to borrow against in the relevant accounts that you selected when taking out the loan. While you will still be able to buy and sell shares within these accounts you will not be able to transfer or withdraw cash to the value of the lock from these accounts.

This is known as a collateral lock.

The term collateral refers to an asset that a lender accepts as security for a loan. The collateral acts as a form of protection for the lender. That is, if the borrower defaults on their loan payments, the lender can seize the collateral and sell it to recoup some or all of its losses.

Securities, refer specifically to financial assets (such as stocks or shares) that are used as collateral

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In respect of FSRs, EasyEquities acts as principal to a contract for difference issued to the investor, where the investor will have a contractual claim against EasyEquities to the economic benefits and risks associated with share ownership (price movements and dividends) without having ownership rights in the underlying share. Fractional share rights (FSRs) which are issued through a contract for difference, are an over the counter derivative. Unlike whole shares, FSRs do not carry any voting rights. As the investor makes further investments in FSRs and ultimately ends up with a whole share, the contract for difference is closed out and ownership whole share is delivered to the investor.

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