The Securities and Exchange Commission (SEC) has implemented new regulations aimed at reducing systemic risks associated with margin loan activities. These rules prohibit securities firms and derivatives operators from extending loans secured by securities for purposes other than genuine investment.
The SEC’s updated margin loan framework seeks to strengthen risk management, shield securities companies from potential losses, and bolster investor trust in the capital market, the regulator stated in an announcement.
Under the new guidelines, brokers and derivatives firms are explicitly banned from offering loans against securities without a clear investment intent to prevent misuse of securities-backed credit.
The revised regulations also include adjustments to the initial margin requirements for newly listed stocks from IPOs, reducing the risk of insufficient collateral coverage. Additionally, firms are now mandated to align their lending practices with their financial standings by setting stricter limits on both individual and overall margin loans.
To mitigate concentration risk, securities firms must adopt effective risk management procedures, including monitoring the concentration of collateral securities and borrower exposures, and reporting potential risks promptly, the SEC emphasized.
The agency also specified eligible investment fund units that can be used as collateral or marginable securities—such as index funds, mutual funds, and feeder funds—provided they meet certain criteria and are listed on the Stock Exchange of Thailand, including exchange-traded funds.
Furthermore, firms are reminded to evaluate the true substance of transactions to ensure lending arrangements are not disguised or structured as prohibited margin loans.
The new regulations took effect on October 16. However, the stricter lending limits based on firms’ financial capacity will be enforced starting April 16, 2026. Companies with existing margin exposures exceeding the new thresholds will be granted a one-year grace period from the Royal Gazette publication date to comply.
Prakit Siriwattanaket, managing director of Merchant Partners Asset Management, commented that amid fragile economic conditions and tighter liquidity, businesses are struggling to manage cash flow through traditional channels like bank loans, bonds, or capital increases.
He noted that such practices are unlikely among bank-affiliated brokers but may occur in some independent firms. He welcomed the SEC’s efforts to clarify and tighten regulations as a wise step to reduce systemic risks.
As of September 26, the total margin loans in the market stood at 48.8 billion baht, backed by collateral totaling 174 billion baht—indicating a margin of approximately 3.58 times the outstanding debt, according to SEC data.