South Korean regulators waive credit collateral requirements to curb market volatility

KOSPI Financial Supervisory Service forced sales credit collateral South Korea stock market

South Korean financial authorities, including the Financial Supervisory Service and the Korea Financial Investment Association, have announced a temporary waiver of the 140% credit collateral maintenance requirement for securities firms. The measure, effective from November 9 until January 31, aims to prevent a surge in forced sales, known as “ban-dae-mae-mae,” following a sharp decline in the KOSPI index.

By easing these requirements, regulators hope to prevent a downward spiral where forced liquidations of leveraged positions trigger further market declines. Major securities firms are implementing various responses: Mirae Asset Securities and NH Investment & Securities are lowering their collateral maintenance ratios to 130%, while Kiwoom Securities and Korea Investment & Securities are allowing customers to apply for one-day deferrals of forced sales.

While the move provides temporary relief to leveraged investors, some industry experts warn of potential risks. Concerns have been raised regarding the possibility of increased financial instability for firms if market volatility persists, as well as the potential for moral hazard among investors.

Entities

Financial Supervisory Service · KOSPI · Kiwoom Securities · Korea Financial Investment Association · Korea Investment & Securities · Mirae Asset Securities · NH Investment & Securities · South Korea

Claims

What the coverage asserts, and how many sources carry each claim.

[● 4 SOURCES] Mirae Asset Securities will lower its domestic stock collateral maintenance ratio to 130%. socialvalue.kr · www.namdonews.com · biz.heraldcorp.com
[● 4 SOURCES] The KOSPI index fell below the 5,000 level. biz.heraldcorp.com · www.imaeil.com · www.hani.co.kr · www.joseilbo.com
[● 5 SOURCES] The measure was decided during an emergency market situation meeting on November 6. www.joseilbo.com · socialvalue.kr · www.namdonews.com · www.hani.co.kr
[● 7 SOURCES] The current regulation requires securities firms to maintain collateral at 140% or more for credit loans. biz.heraldcorp.com · www.joseilbo.com · socialvalue.kr · www.namdonews.com · www.hani.co.kr · +1 more
[● 5 SOURCES] Kiwoom Securities and Korea Investment & Securities will allow customers to apply for a one-day deferral of forced sales. socialvalue.kr · www.namdonews.com · biz.heraldcorp.com · www.sisajournal.com
[● 5 SOURCES] The Financial Supervisory Service is waiving the 140% collateral maintenance requirement for securities firms. www.joseilbo.com · socialvalue.kr · www.namdonews.com · www.hani.co.kr
[● 4 SOURCES] The waiver is effective from November 9 until January 31. socialvalue.kr · www.namdonews.com · www.hani.co.kr
[○ 1 SOURCE] Foreigners net sold over 6 trillion won in the spot market over two days. www.joseilbo.com