The Securities Commission Malaysia (SC) and Bursa Malaysia Berhad (Bursa Malaysia) have extended the temporary relief measures relating to margin financing to Dec 31. The relief measures, which took effect on March 27, are due to expire on Sept 30.
The flexibilities accorded under the relief measures will enable brokers to better manage their clients’ margin financing facilities and maintain stability in the marketplace amid continued market uncertainties arising from the Covid-19 pandemic.
During this interim period, brokers can continue to exercise discretion whether or not to impose force selling measures on clients, and accept other types of collateral from investors such as bonds, unit trusts, gold and immovable properties for purposes of
margin financing.
Previously, brokers were required to automatically liquidate their clients’ margin accounts if the equity value in those accounts falls below 130 percent of the outstanding balance.
These temporary measures are subject to brokers meeting their own capital adequacy ratio and shareholder funds as required by Bursa Malaysia. They are also expected to exercise discretion in accordance with their own credit risk policies.
Both the SC and Bursa Malaysia will continue to monitor developments in the securities market and evaluate the adequacy of existing measures to support an orderly market and to mitigate potential risks. For a full array of measures to help capital market
participants mitigate potential risks arising from Covid-19, please visit www.sc.com.my/covid-19.
