Share Margin Financing

Share Margin Financing (SMF) is a standby, revolving personal lending facility secured by collaterals for the trading of shares on Bursa Malaysia. The account open for this purpose is call Margin Account.

In Malaysia, share margin financing can be provided by conventional banks, stock brokers or investment banks. Facilities provided by conventional banks are regulated Bank Negara Malaysia, whereas stock brokers provided facilities are regulated by Securities Commission Malaysia.

Collateral is usually required to obtain share margin financing. Acceptable forms of collateral include cash, warrants of certain shares, unit trusts, fixed deposits and quoted securities on Bursa. It is important to note that acceptable types of collaterals may differ between lenders.

Some banks offer margin of financing up to 60% of current market price shares quoted in Bursa Malaysia.

Share margin financing is considered a sophisticated facility meant for stock market investors. However, it is not difficult to understand, and even less difficult to get started (Just check with any brokerage or bank!). Lastly, always practice caution and do not over-leverage when using financing to make investments into the stock market.

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