Covid-19: Temporary Margin Financing Flexibilities Further Extended to 30 June 2021

Bursa Malaysia Securities Berhad issued Participating Organisations’ Circular No. R/R 16 of 2020 on 16 December 2020 stating that the temporary relief measures relating to margin financing that are due to expire on 31 December 2020 will be further extended to 30 June 2021.
These temporary measures 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 measures were first implemented under Bursa Malaysia Securities Berhad’s Participating Organisations’ Circular No. R/R 6 of 2020 to mitigate the volatility and selling pressures caused to the global and local securities markets by the outbreak of the Covid-19 pandemic and were initially due to expire on 30 September 2020, but were extended to 31 December 2020 under Participating Organisations’ Circular No. R/R 12 of 2020.