Non-cash collateral to be introduced for TFEX from April 23

Stocks and Financial Services Press Releases Wednesday April 18, 2018 08:55
Bangkok--18 Apr--SET

Thailand Futures Exchange PCL (TFEX), jointly with Thailand Clearing House Co., Ltd. (TCH), will allow investors to pledge both cash and non-cash collateral for margin requirement, starting from April 23, aiming at enhancing flexibility and convenience for trading, as well as lowering costs.

TFEX Managing Director Rinjai Chakornpipat stated that TFEX this year has focused more on quality in all aspects and would develop products and services features to better meet investor demand. The most recent development is for TCH to accept "non-cash collateral", enabling investors to use assets such as government bonds, Bank of Thailand bonds, and stocks, together with cash, as collateral to meet their margin requirement.

At this initial stage, the non-cash collateral will be restricted to shares which are underlying assets of Stock Futures only. A haircut rate will also be applied to the stocks because of the fluctuation in stock prices as well as each stock has their own liquidity level. Furthermore, investors will still have to pledge both cash together with non-cash collateral as margin. This is to guarantee the smooth operation of mark-to-market mechanism.

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