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SEC proposes extending securities classes qualified for purchasing on margin and placement as collateral to increase purchasing power in margin accounts



Tuesday 10 July 2018 | No. 76 / 2018


Bangkok, 10 July 2018 –SEC is seeking public comments on inclusion of additional securities classes qualified for purchasing on margin by a margin account customer of a securities company and extension of collateral types permitted for placement by the customers to increase purchasing power, which must be securities with liquidity and reliable market price or reference price. This will give the customers more opportunity to invest according to their desired strategy and to effectively use securities in their possession while securities company is able to provide more integrated services.

The rules on margin lending (margin account) which have been in effect since 1997 permit SC to lend money to its customer only for the purpose of purchasing listed securities on a condition that the customer must place cash or listed securities as initial margin with securities company . However, bonds or investment units are not permitted to be place with securities company as collateral to increase purchasing power.

SEC therefore proposes the inclusion of additional securities classes for margin lending by securities company to the customer for investments apart from listed securities. Such securities, which must have liquidity and reliable market price or reference price, are, namely (1) bonds registered with the Thai Bond Market Association and being government bonds or being given investment grade ratings bonds and (2) investment units of a mutual fund, which trades on every business day and does not have any restriction on transfer and pledge. In addition, such securities will be permitted to be placed as collateral to increase purchasing power of the customer.

This will give the customers various investment alternatives and allow them to use securities to increase purchasing power while securities company is able to meet requirements of the customers, and may also help increase the liquidity and improve the bond secondary market and the mutual fund market. However, securities company must upgrade its operating system and risk management systems to support the additionally approved securities classes.

The consultation paper is available at www.sec.or.th/hearing. Stakeholders and interested parties are welcome to submit comments and recommendations via the website, facsimile to 0-2033-9999, or email: kornwara@sec.or.th or kamonwan@sec.or.th. The public hearing ends on 24 July 2018.

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Building Confidence in the Capital Market
NEWS
Securities and Exchange Commission
Corporate Communication and Investor Service Department
Tel. (66)2033-9502-5 E-mail: press@sec.or.th
No. 76 / 2018 Tuesday 10 July 2018
SEC proposes extending securities classes qualified for purchasing on margin and placement as collateral to increase purchasing power in margin accounts
Bangkok, 10 July 2018 –SEC is seeking public comments on inclusion of additional securities classes qualified for purchasing on margin by a margin account customer of a securities company and extension of collateral types permitted for placement by the customers to increase purchasing power, which must be securities with liquidity and reliable market price or reference price. This will give the customers more opportunity to invest according to their desired strategy and to effectively use securities in their possession while securities company is able to provide more integrated services.

The rules on margin lending (margin account) which have been in effect since 1997 permit SC to lend money to its customer only for the purpose of purchasing listed securities on a condition that the customer must place cash or listed securities as initial margin with securities company . However, bonds or investment units are not permitted to be place with securities company as collateral to increase purchasing power.

SEC therefore proposes the inclusion of additional securities classes for margin lending by securities company to the customer for investments apart from listed securities. Such securities, which must have liquidity and reliable market price or reference price, are, namely (1) bonds registered with the Thai Bond Market Association and being government bonds or being given investment grade ratings bonds and (2) investment units of a mutual fund, which trades on every business day and does not have any restriction on transfer and pledge. In addition, such securities will be permitted to be placed as collateral to increase purchasing power of the customer.

This will give the customers various investment alternatives and allow them to use securities to increase purchasing power while securities company is able to meet requirements of the customers, and may also help increase the liquidity and improve the bond secondary market and the mutual fund market. However, securities company must upgrade its operating system and risk management systems to support the additionally approved securities classes.

The consultation paper is available at www.sec.or.th/hearing. Stakeholders and interested parties are welcome to submit comments and recommendations via the website, facsimile to 0-2033-9999, or email: kornwara@sec.or.th or kamonwan@sec.or.th. The public hearing ends on 24 July 2018.

_______________________

QR code for further details