Bangkok: The Stock Exchange of Thailand (SET) has unveiled four key benefits of publishing information about stocks used as collateral for debt repayment in margin accounts on its website. This initiative aims to assist investors in making informed decisions by providing essential data.
According to Thai News Agency, the publication of this information serves several purposes. Firstly, it includes a report listing the names of stocks used as collateral in margin accounts with brokers across 36 Thai stock exchanges. This transparency aligns with ongoing efforts by the Securities and Exchange Commission (SEC) to enhance related criteria, ensuring investors have access to comprehensive data on stock collateral and important transactions involving listed companies and executives.
Secondly, the information details the number and percentage of shares placed as collateral. This data is organized by the volume and proportion of shares involved. A significant number of shares placed as collateral, relative to the to
tal shares, can lead to considerable price volatility if those shares are force-sold.
Thirdly, the initiative highlights the percentage of Free Float, which is crucial for assessing market stability. A high volume of collateralized stocks with a low Free Float can result in marked price fluctuations if forced sales occur.
Lastly, the information is crucial for investment decision-making. In a margin account setup, investors typically use a combination of their own funds and borrowed capital to invest, with collateral required to secure the loan. The data assists in understanding potential risks, such as margin calls, where brokers may demand additional collateral or initiate forced sales if the value of the collateral falls below a specified threshold. Such accounts are recommended for experienced investors with strong investment and debt repayment capabilities.
This move by the SET enhances the transparency of the stock market and provides investors with critical insights needed to navigate the complexiti
es of margin trading.