Thai bourse to increase front-end pledging for cash accounts to 15%
The Stock Exchange of Thailand (SET)’s Board of Governors (BoG) resolved yesterday (Feb. 27) to lift front-end pledging for cash accounts to 15% of the credit line, up from 10%. (This refers to cash accounts for investors who wish to make full cash payment for securities purchased.) The new pledging requirement will come into effect on June 1, 2008 and apply to cash accounts of both local and foreign individuals.
The BoG introduced the change to reduce the risk of settlement defaults and increase trading stability. In addition, the Board approved the use of other asset types as collateral, SET Executive Vice President and Board Secretary Suthichai Chitvanich said.
“The Association of Securities Companies (ASCO) initially proposed the change to enhance the industry’s risk protection. ASCO’s study of the levels of collateral pledging concluded that 15% was appropriate,” Mr. Suthichai said.