The Thailand Securities & Exchange Commission has opened a public consultation on proposed amendments to margin loan regulations for securities purchases, aiming to ensure securities companies properly assess and manage risks in client collateral and associated credit exposures. The changes are intended to reduce clearing and settlement risk and bad debts arising from forced liquidation, and to limit broader impacts on capital market stability and credibility. The proposal responds to observed volatility and declines in stocks used as margin collateral, cases where forced-sale proceeds may not cover outstanding debt, and practices such as high margin lending relative to a broker’s financial position and concentration of margin loans in a limited number of clients and collateral types. Key measures include revising the initial margin rate for initial public offering shares, tightening lending criteria by linking total outstanding margin debt and per-client exposures to a firm’s financial position, setting per-customer concentration limits for collateral relative to an issuer’s total outstanding shares with monitoring to prevent inappropriate trading, and strengthening expectations around margin calls and forced sales. Daily redemption funds would be removed from the list of marginable securities and from eligible collateral for both margin loans and securities borrowing and lending transactions, and brokers would have to implement measures to ensure margin loans are genuinely for securities trading rather than constituting Loan against Securities, including arrangements such as using margin loans to buy big-lot securities from related parties. The public hearing closes on 4 February 2025.

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