30-07-2012, 10:22 PM
I wonder if this may inflate our retail trading cost?
SINGAPORE - Singapore Exchange Ltd (SGX) said it is proposing that members will have to deposit margins on equities trades cleared through its system, as part of a drive to strengthen the city-state's financial system.
The exchange announced the plan on Monday, following measures introduced by the Monetary Authority of Singapore last week to create a liquidity buffer of S$20 billion to back up a deposit insurance scheme in the event of a banking crisis.
Under SGX's proposals, margins will be imposed on members of its central depository (CDP) clearing house and will vary depending on the level of risk their portfolio poses to the clearing system in the event of a default.
The changes, expected to take effect in January 2013, could raise overall trading costs, but will align SGX's practises with new international standards proposed by the International Organization of Securities Commissions.
Besides stocks, the proposed rules will also apply to other securities including structured warrants, real estate investment trusts and exchange traded funds.
Currently, CDP has a fund which comprises of contributions from SGX and its clearing members. It covers losses that could arise from the liquidation of a defaulting member's positions.
With the introduction of margin requirements, SGX is proposing to reduce CDP members' minimum contribution to the clearing fund to S$500,000 from S$1 million, it said.
SINGAPORE - Singapore Exchange Ltd (SGX) said it is proposing that members will have to deposit margins on equities trades cleared through its system, as part of a drive to strengthen the city-state's financial system.
The exchange announced the plan on Monday, following measures introduced by the Monetary Authority of Singapore last week to create a liquidity buffer of S$20 billion to back up a deposit insurance scheme in the event of a banking crisis.
Under SGX's proposals, margins will be imposed on members of its central depository (CDP) clearing house and will vary depending on the level of risk their portfolio poses to the clearing system in the event of a default.
The changes, expected to take effect in January 2013, could raise overall trading costs, but will align SGX's practises with new international standards proposed by the International Organization of Securities Commissions.
Besides stocks, the proposed rules will also apply to other securities including structured warrants, real estate investment trusts and exchange traded funds.
Currently, CDP has a fund which comprises of contributions from SGX and its clearing members. It covers losses that could arise from the liquidation of a defaulting member's positions.
With the introduction of margin requirements, SGX is proposing to reduce CDP members' minimum contribution to the clearing fund to S$500,000 from S$1 million, it said.