finance
South Korean brokerages raise margin requirements on major stocks
Several brokerages increased margin rates on Samsung Electronics and SK Hynix after market volatility rose. The changes require investors to post more cash when buying shares on margin.
Jul 8, 7:53 PM·1m read1 source
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South Korean brokerages have raised margin requirements on several large stocks, including Samsung Electronics and SK Hynix. The moves follow increased market volatility and aim to limit leveraged trading.
Recent adjustments One brokerage raised the margin rate on Samsung Electronics from 20 percent to 30 percent on July 2. The same firm increased the rate on SK Hynix from 20 percent to 30 percent on June 25. Another brokerage lifted rates on three additional stocks to 100 percent this month. At 100 percent, investors must pay the full purchase price in cash, eliminating margin purchases.
Industry context Brokerages have also adjusted rates on the same stocks multiple times this year. One firm now applies a 60 percent rate to Samsung Electronics and SK Hynix and 100 percent to most other issues. A brokerage industry representative said higher trading volume and volatility have increased the amount firms must post with the exchange.
The representative added that while risk controls are necessary, the added cash requirement strains liquidity management. Some brokerages have offset higher rates on volatile stocks by lowering rates on less volatile names.
