SC, Bursa extend margin financing relief measures to Dec 31

KUALA LUMPUR: The Securities Commission (SC) and Bursa Malaysia Bhd have extended the temporary relief measures relating to margin financing for equity trades to Dec 31.

They said in a joint statement yesterday the measures were meant to maintain stability in the marketplace amid continued uncertainties arising from the

Covid-19 pandemic.

They said flexibilities accorded under the relief measures would enable brokers to better manage their clients’ margin financing facilities.

“The relief measures, which took effect on March 27, are due to expire on Sept 30 (tomorrow),” said the statement.

The SC and Bursa also said during the interim period, brokers could continue to exercise discretion on whether 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 per cent of the outstanding balance.

According to the statement, these temporary measures were subject to brokers meeting their own capital adequacy ratio and shareholder funds as required by Bursa.

“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,” they added.