FinancialAdvisor's College Class (FACC)

[FinancialAdvisor]

Tokyo Stock Exchange may tighten stock margin trading rules - report

"the first overhaul since 1990"... what an interesting year!!!>>>


AFX News Limited
Tokyo Stock Exchange may tighten stock margin trading rules - report
12.27.2005, 12:11 AM

TOKYO (AFX) - The Tokyo Stock Exchange is considering toughening stock margin trading rules, the first overhaul since 1990, the Nihon Keizai Shimbun reported without citing sources.

Margin trading enables investors to trade shares in amounts exceeding the cash or stock they have on hand. The rule change is aimed at curbing this power of leverage, the business daily said.

The TSE aims to revise its regulations as early as the beginning of 2006, implementing the rules following approval by the Financial Services Agency, the Nihon Keizai said.

According to the report, the bourse is increasingly concerned about the overheating market at a time when the popularity of Internet trading is helping

boost margin trade balances.

Because margin trading losses can balloon depending on share price fluctuations, brokerages require investors to deposit cash as collateral. Investors are allowed to put up stocks and other securities in lieu of cash, the report said.

The TSE is considering reducing to 70 pct the upper limit on the value of stock that can be counted as collateral. Since 1990, it has kept this ceiling at 80 pct under a special provision, according to the daily.

The Tokyo bourse also intends to increase the minimum margin deposit by 10-20 percentage points from the current 30 pct. An investor seeking to conduct a 1 mln yen transaction would be required to maintain a margin deposit somewhere between 400,000 yen and 500,000 yen, the report said.

[e-mail]


LINK: http://www.forbes.com/business/feeds/afx/2005/12/27/afx2414923.html