South Korea will waive the 140% collateral maintenance requirement on margin lending for three months starting Nov. 9, a move aimed at heading off forced liquidations after the benchmark KOSPI fell below the 5,000-point mark for the first time in nine months.
The decision came from an emergency review meeting chaired by Finance Minister Lee Hyoung-il, with officials from the Financial Services Commission, the Financial Supervisory Service and the Bank of Korea taking part, according to local media reports. Under capital market rules, brokerages that lend investors money to buy shares must hold collateral of at least 140% and keep that ratio in place. Suspending the standard gives securities firms room to manage collateral demands on their own, reducing the forced selling of clients’ shares whose value has shrunk.
The KOSPI dropped as much as 8.8% in early Friday trading, breaching 5,000 and triggering a 20-minute trading halt. Samsung Electronics and SK Hynix led the declines. The selloff tracked heavy overnight losses on Wall Street, where worries about returns on artificial intelligence investment and possible regulatory limits on data-center development weighed on sentiment.
Authorities said they are prepared to roll out further steps should market volatility worsen.
Key measureDetailRule suspended140% margin collateral maintenance ratioDurationThree months, starting Nov. 9Market triggerKOSPI below 5,000; intraday drop of up to 8.8%Trading impact20-minute halt on Friday
Note: The KOSPI had not traded below 5,000 in nine months before Friday’s session.