Thailand SEC cracks down on margin loan misuse
Margin loans help investors boost market positions using securities collateral
The Securities and Exchange Commission (SEC) will initiate a second round of public hearings regarding tighter regulations on margin loans. This comes amid concerns that certain brokerages have allowed margin credit to be utilised for non-investment purposes.
Surasak Ritthongpitak, the Assistant Secretary General of the SEC, indicated that forthcoming regulatory amendments will likely prevent securities firms from granting margin loans for activities unrelated to stock market investments. He said the new regulations are anticipated to be implemented in the third quarter.
“Margin loans are intended to assist investors in strengthening their capital market positions by using securities as collateral.
“We have identified instances where firms permit clients to use the borrowed funds for non-investment purposes, contravening the core objective of margin lending.”
If securities serve as collateral and the funds are diverted for personal or business purposes, it essentially transforms the loan into a personal or multi-purpose loan, which only licensed financial institutions, authorised by the Bank of Thailand, can provide.
The SEC initially held hearings on margin loans in February and is now addressing certain concerns.
“The second round will refine critical aspects to ensure stronger risk management practices among securities firms,” Surasak said.
He acknowledged that tightening these rules may substantially affect securities businesses, particularly given the current challenging market conditions. Brokerages fear that stricter loan limits might diminish revenue and compel clients to reduce their margin portfolios.
While some new measures might be enforced in the third quarter, others will allow firms additional time for adaptation.
As of the end of April, the total outstanding value of margin loans was approximately 62 billion baht, according to the SEC.
Loans adjustments
Earlier this year, the regulator adjusted margin loan requirements, including changes to initial margin levels for initial public offering stocks, aligning credit limits with brokers’ financial conditions, implementing concentration limits on client collateral, and conducting credit risk assessments.
The SEC also removed mutual funds from the list of eligible securities for margin loans and disqualified them as collateral for margin loans and securities borrowing and lending transactions, citing systemic risks that could trigger widespread forced sales of fund units.
Furthermore, brokers are now mandated to ensure that margin credit is used exclusively for securities trading, reported Bangkok Post.
Surasak noted that several investigations into naked short selling, the practice of selling shares without owning them, were conducted, but no violations were found. A recent incident involving a broker was attributed to a system error and involved an insignificant volume of shares.
A centralised platform, called the Security Bureau, is being developed to enable brokers to monitor margin loans across firms. This system, in collaboration with the Association of Securities Companies, is expected to launch on February 1, 2026.
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