Hong Kong Watchdog Seeks Cap On Brokers' Margin Lending

Law360 (April 4, 2019, 5:21 PM EDT) -- The Hong Kong Securities and Futures Trading Commission on Thursday unveiled rules that will limit how much brokers can lend to their clients for stock purchases to five times their capital, part of an attempt to curb what regulators consider excessive risk-taking.

The SFC said the rule aims to prevent brokers from engaging in margin lending beyond their capacity, which has become a concern for regulators following recent stock plunges that have exposed vulnerabilities in Hong Kong's financial markets. Margin loans involve loaning money to customers so they can buy shares, using securities in the investor's account as collateral. Hong Kong...

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