Margin financing flexibilities for capital market participants
26 March 2020   |   Kuala Lumpur

The Securities Commission Malaysia (SC) announced today that it has approved additional measures by Bursa Malaysia Berhad (Bursa Malaysia) to assist market participants in this volatile and challenging market environment.

Brokers may, at their discretion, not make margin calls or impose haircuts on any collateral and securities purchased and carried in margin accounts. They are also empowered to exercise their discretion whether or not to impose force selling measures on clients. Previously, brokers were required to automatically liquidate clients’ margin accounts if the equity in those accounts falls below 130% of the outstanding balance.

The SC has also approved a broader list of accepted collaterals for margin financing. With this flexibility, brokers can now accept other collaterals, such as bonds, unit trusts, gold and immovable properties to maintain their clients’ margin accounts, and value these collaterals accordingly.

All the above, which takes effect 27 March - 30 September 2020, 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.

“This move will help brokers to continue focusing on their business and assist their clients during this period of unprecedented volatility and uncertainty resulting from the broader market impact of Covid-19,” said Datuk Syed Zaid Albar, SC Chairman.

Meanwhile, to facilitate compliance with the Movement Control Order (MCO), brokers, trading participants, clearing participants and authorised depository agents are encouraged to operate shorter counter service hours for their clients.

Further details on these additional measures will be announced by Bursa Malaysia.

The SC also confirms that the capital market will continue to operate as usual, within normal trading hours, during the extended period of the MCO to 14 April 2020. All licensed and registered capital market participants are expected to remain open and operating in line with the MCO objectives to curb the spread of Covid-19.

The SC has been proactively monitoring the national and global development of Covid-19 to assess its impact and will continue to evaluate and calibrate the scale of its responses in order to maintain market integrity.

It has already introduced an array of measures to help capital market participants mitigate potential risks arising from the current heightened volatility and global uncertainties. The full list of measures can be found here www.sc.com.my/covid-19
SECURITIES COMMISSION MALAYSIA 
SC-World Bank-IOSCO Asia Pacific Hub Conference 2019: Enhancing Financial Inclusion through Islamic Finance and FinTech
(From left to right):
  1. Abayomi A. Alawode, Head of Islamic Finance, Finance, Competitiveness and Innovation, The World Bank Group
  2. Datuk Syed Zaid Albar, Chairman of the Securities Commission Malaysia (SC)
  3. Dr. Firas Raad, Country Manager for Malaysia, East Asia and Pacific, The World Bank Group 
  4. Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive of SC
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