Bursa Malaysia Derivatives Clearing is to allow shares to be lodged as margin collateral for derivatives trading. The new option is available from today.
By admitting selected shares as “approved collateral,” the clearing house has enabled trading operations to lodge holdings of them with the futures brokers and clearing house participants as margin collateral for derivatives trading.
“In terms of ownership, the client remains the beneficial owner of these shares and thus is allowed to continue deriving all economic benefits of share ownership for the pledged shares,” says a spokesman for Citigroup in Malaysia. “The exchange also says that, should the investor wish to liquidate part of the equity portfolio that has been pledged for any reason, part or all of the initial margin payment maybe replaced with cash, bank guarantees or letters of credit.”
An initial set of 25 blue chip shares, whose liquidity and price stability is high, has been approved. The list of eligible shares will be reviewed on a quarterly basis by Bursa Malaysia Derivatives.