Wednesday, April 1

Bursa Malaysia offers temporary measures for margin financing, counter service hours

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The measures are aimed at mitigating the force selling pressure on the market, as well as safeguarding investors’ interest in respect to those who have pledged their shares for financing. Bernama Photo

KUCHING: Bursa Malaysia Securities Bhd (Bursa Malaysia) is offering Participating Organisations (POs) to accord the appropriate flexibilities to their clients and also to manage their credit risks in light of growing selling pressures on share prices listed on the bourse.

This came amidst concerns raised by investors and market participants in light of the current challenging and uncertain market conditions.

“Due to the uncertainties in the global as well as local market arising from the Covid-19 outbreak, selling pressures have impacted the share prices, resulting in force selling pressure to many counters and affecting investors, especially those with margin accounts” it said in a statement yesterday.

“In view of the above, and as part of the market management measures, the exchange will facilitate POs to accord the appropriate flexibilities to their clients and also to manage the POs’ credit risks.

“The measures are aimed at mitigating the force selling pressure on the market, as well as safeguarding investors’ interest in respect to those who have pledged their shares for financing.

“Further, these flexibilities may allow investors to provide other types of collateral for purposes of margin financing, as may be necessary.

“Therefore, the relevant provisions of the Rules and Directives of Bursa Malaysia Securities Berhad will be waived and modified to facilitate these measures.”

Bursa Malaysia said the waivers and modifications are made subject to the POs continuing to comply with the Capital Adequacy Requirements and requirements on minimum Shareholders’ Fund at all times.

The waiver and modification in relation to margin financing will be effective from March 27, 2020 until September 30, 2020.

Meanwhile, POs are strongly encouraged to put in place the best practice in relation to the counter service hours from March 27, 2020 to April 14, 2020, or during any further extension of the MCO by the Malaysian government.

“The exchange strongly encourages all POs which provide counter service to their clients/customers to limit their respective counter service hours to between 10am to 3pm during business days.”