The framework should require that there be a determination of the suitability and valuation of the margin collateral in a margin financing account and require that the following factors be taken into account for that purpose:
- type and quality of margin collateral;
- price volatility of margin collateral;
- where the margin collateral is listed or traded in a foreign jurisdiction or is cash in a foreign currency, matters such as:
- exchange rate volatility,
- ease of liquidating collateral in the foreign jurisdiction, and
- differences in legal and regulatory framework between such foreign jurisdiction and Singapore; and
- where the margin collateral is custodised in a foreign jurisdiction, matters such as:
- risks arising from differences in custody arrangements in such foreign jurisdiction; and
- treatment of, or legal protection afforded to, customer collateral in the foreign jurisdiction, e.g. prohibition of title transfer for retail customer collateral.
Added on 1 April 2025.