Many securities companies cut interest rates on margin trading loans

State Securities Commission: investors worrying about Covid-19 epidemic

Reducing margin interest rates is one of the efforts of many securities companies: Source: Internet.

Many margin packages launched

Looking at the evolution of the market, we can see the impact of the Covid-19 epidemic on the economy and the stock market is not small.

However, in this context, many economic experts have said that Vietnam's market is not at a worrying level and investors and intermediary financial institutions are much more stable than in 2008 during the global financial crisis.

In the difficult context of the market, some securities companies have started to cut interest rates on margin loans (margin trading) to retain investors.

According to Bui The Tan, Head of Individual Customer Services, SSI Securities, the Covid-19 epidemic had made an impact but was not too concerned and not subjective. Many preventive measures are needed now.

SSI Securities Company has launched a margin package of VND 2,000 billion with an interest rate of 9% for both current investors and new customers. Accordingly, in the three months since early March 2020, customers who have opened accounts at SSI have increased debt from securities trading transactions compared to the previous three months and new customers have incurred outstanding loans. The margin during the above period will be borrowed at an interest rate of 9% per year; the maximum loan value is 50% of the average outstanding loan.

According to a representative of SSI, according to regulations, the nominal term of the preferential package is three months, but as the interest rate on bank loans tend to decrease, SSI can maintain these preferential packages until the end of this year.

AIS Securities Company also announced to reduce the margin loan interest rate to only 9% / year instead of the current interest rate of 9.5% per year. Specifically, investors using margin lending services with outstanding loans of less than VND 1 billion daily will enjoy interest rates of 0.025% per day, equivalent to 9% a year; with an outstanding loan of more than VND 1 billion daily, the interest rate is 0.03334% a day, equivalent to 12% per year.

Mirae Asset Vietnam Securities Company also announced the deployment of a preferential interest rate margin programme from only 9.5 - 9.9% per year to support investors against unpredictable developments of the stock market due to the outbreak of Covid-19. The interest rate will apply until the end of June 30, 2020 for customers that open margin trading accounts at the company.

Loosen margin cash flow into the market

At a recent State Securities Commission meeting with new securities companies, Pham Hong Son, Vice Chairman of the State Securities Commission, expressed his support for the proposal to extend the margin contract term from the current three months to six months or nine months for investors to feel secure when holding stocks. The Securities Commission will assign the specialised department to review the legal regulations, if necessary, it will report to the Ministry of Finance for permission to revise this point.

With the proposal to loosen margin cash flow into the stock market, the State Securities Commission leaders asked the Hanoi Stock Exchange to report to the commission the proposal of allowing margin with good stocks on UPCoM and propose to always list these codes. According to Pham Hong Son, the stocks on the UPCoM floor are of similar quality to the listed floor and the opening of margin cash flow into these stocks is acceptable. However, to come to this decision, the Securities Commission will have to report to the Ministry of Finance.

The State Securities Commission is implementing many measures to support the stock market and investors amid the Covid-19 epidemic in Vietnam.

The State Securities Commission and its units will intensify monitoring and supervision of market developments to bring the official and transparent information to the market; reassure investor psychology and strictly handle acts of manipulating and profiting by epidemics or spreading false rumours to seek personal benefits.

Within the scope of its authority, the committee will report to the Ministry of Finance solutions to reduce difficulties for businesses operating in the securities industry and for investors, including solutions to cut some types of securities services fees and loosen margin trading regulations that apply to the immediate period.