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New regulations issued on securities margin trading

The State Securities Commission (SSC) has issued new regulations on which Unlisted Public Company Market (UPCoM) shares on the Premium list will be allowed for margin trading from April this year. This decision will replace existing regulations on securities margin transactions.
New regulations issued on securities margin trading ảnh 1Illustrative image (Source: internet)
Hanoi (VNA) - The State Securities Commission (SSC)has issued new regulations on which Unlisted Public Company Market (UPCoM)shares on the Premium list will be allowed for margin trading from April thisyear. This decision will replace existing regulations on securities margintransactions.

Margin trading allowsinvestors to buy more stock than they would be able to normally.

Under the new rules,shares on the UPCoM (under the UPCoM Premium list) will be eligible for margintrading purchases. The old regulations defined securities on the UPCoM asunapproved for margin trading.

It means about 80 sharesregistered for trading under the UPCoM Premium list which meet the conditionsfor margin trading will be eligible for margin purchases. However, thisregulation needs approval from the Hanoi Stock Exchange which operates andmanages the UPCoM.

The new decision definessecurities eligible for margin trading as those which comprise shares andinvestment fund certificates listed for trading for at least six months up tothe time of announcement of the list of approved securities.

According to the draftdecision in September last year, securities with total listing time of threemonths are qualified for margin trading transactions. This period was said tobe suitable as the number of new listings on the two exchanges is rising rapidly.

Under the new rules,shares of companies which violate information disclosure and tax regulationsand have financial reports not fully accepted by auditors are not eligible formargin trading. The SSC also added time limits for companies to publish theirfinancial statements to be eligible for securities margin trading.

Margin ratio is theratio of equity over total assets in a margin trading account at market value.

The initial margin ratio- a portion of the purchase price that investors have to deposit - is regulatedby securities companies but must be at least 50 percent of the purchase price.

The maintenance marginration which is the minimum account balance that investors must maintain mustbe 30 percent at the minimum.

Other regulations on limitson financing margin trading applied for broker companies were kept unchanged.

The new decision willtake effect on April 1, 2017.-VNA
VNA

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