Covid-19: Temporary Margin Financing Flexibilities Extended to 31 December 2020

The Securities Commission Malaysia and Bursa Malaysia Berhad issued a joint media statement on 28 September 2020 announcing the extension of the temporary relief measures relating to margin financing that are due to expire on 30 September 2020 to 31 December 2020.
 
These temporary measures which were announced on 27 March 2020 and implemented vide Bursa Malaysia Securities Berhad’s Participating Organisations’ Circular No. R/R 6 of 2020 give flexibility and discretion to brokers to determine:
 
  • whether to liquidate their client’s margin account if the value of the equity in the margin account falls below 130% of the outstanding balance;
  • whether to make additional margin calls or impose haircuts on any collateral and securities in margin accounts upon the occurrence of the events set out in Rule 7.30(19)(a) of the Rules and Directives of Bursa Malaysia Securities Berhad, i.e. unusually rapid or volatile changes in the value of securities, non-existence of an active market for the securities, suspension from trading of the securities on a market or there being no possibility of immediate liquidation for the securities; or
  • whether to accept other forms of collaterals, such as bonds, collective investment schemes, unit trusts, gold and immovable properties for purposes of maintaining their clients’ margin and to value such collaterals according to the broker’s credit policy.          
The extension of the measures set out in Participating Organisations’ Circular No. R/R 6 of 2020 has been formalised in Bursa Malaysia Securities Berhad’s Participating Organisations’ Circular No. R/R 12 of 2020.