The Korea Financial Investment Association has revised its operational regulations to improve the individual margin trading lending system. This was carried out as a follow-up measure to the 'Short Selling System Improvement Plan' announced in June this year and the revision of the Financial Investment Business Regulations.
According to the regulation revision, new provisions were established regarding the obligation to provide dedicated accounts for margin trading lending, collateral price discount evaluation, and repayment period restrictions.
The obligation to provide dedicated accounts for margin trading lending requires the 28 securities firms engaged in margin trading lending to provide a 'dedicated margin trading lending account' upon customer request. Financial investment firms that only offer integrated accounts must complete the development of the dedicated account system by the end of March next year.
The dedicated margin trading lending account sets the collateral ratio at 105% or higher and applies discount evaluation to securities provided as collateral. KOSPI 200 stocks will be recognized at 88% of the closing price on the day, and other listed stocks at 68%.
Financial investment firms engaged in margin trading lending will set the collateral ratio uniformly at 105%, and considering the discount evaluation, the application will be the same or more favorable compared to institutional lending depending on the type of collateral.
The repayment period will be standardized. The repayment period for margin trading lending will be applied the same as institutional lending transactions. It is restricted so that the repayment period, including extensions, does not exceed 12 months within 90 days.
A representative from the Korea Financial Investment Association stated, "Going forward, the financial investment industry will continue to support the government's short selling system improvement policies by steadily establishing the short selling IT system," and added, "We will continue to strive to restore investor trust and strengthen the competitiveness of our stock market."
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