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Investment advice and corporate finance
Module 12Investment Management and Corporate FinanceA Margin Account shows an Outstanding Balance of RM200,000, securities purchased and carried worth RM236,000 and cash collateral of RM20,000. The client has made no written request. What must the PO do?
Equity is Margin (cash and collateral deposited) plus the securities purchased and carried: 20,000 + 236,000 = RM256,000, which is 128% of the RM200,000 Outstanding Balance. Rule 7.30(11) and (12) say Equity must not fall below 130%, and if it does the PO must liquidate so that Equity is not less than 130%, unless it agrees to the client's written request and settlement proposal under Rule 7.30(13); none was made here. The 131% figure deducts the cash from the Outstanding Balance, which Directive 7.30-001 para 2.1 forbids. A 100% trigger has no basis in the Rules. Rule 7.30(12) requires liquidation only to the 130% level, not a wholesale sell-down. Source: Rules of Bursa Malaysia Securities Rules 7.30(11)-(13), Rule 1.01 (Equity, Margin); Directive No. 7.30-001 para 2.1 (as at October 2026).
Netting cash collateral against the Outstanding Balance inflates the ratio and hides a shortfall.
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