Controlling the excitement of the stock market by reducing the credit ratio – Tejaratnews
According to the report of Tejarat News, yesterday, the management of the supervision of brokers of the stock exchange organization announced in a notification that the credit ratio of the stock exchange and over-the-counter has decreased.
Accordingly, in a notification with the approval of the market risk monitoring committee, the latest changes regarding the reduction of the adjustment coefficients of the shares accepted in the Tehran Stock Exchange and the first and second markets of the Iran OEx Exchange, as well as the shares listed in the base market of the Iran OEx Exchange Company in the calculation of the transaction guarantee account The creditworthiness of the securities was announced. Also, this announcement is effective from the first working day of next week, which is 4 Ardbehesht month.
According to the new notification of the management of the supervision of the brokers of the stock exchange organization, it was decided that the coefficient of shares accepted in the Tehran Stock Exchange and the first and second OTC market is 50% of the closing price, the basic OTC market is 30% of the coefficient determined for the shares accepted in the stock exchange. Tehran and the first and second markets of Iran’s over-the-counter exchange and finally the orange base market of the over-the-counter market, 20% of the coefficient determined for the shares accepted in the Tehran Stock Exchange and the first and the second market of the Iran’s over-the-counter exchange was announced.
According to the conditions of the capital market, it seems that this reduction of the credit ratio from 65 to 50% can have a positive effect on reducing the emotions of stock market transactions and brokerages.
Collateral for credit purchases
Behnam Samadi, a capital market expert, in a conversation with TejaratNews about the credit ratio, said: “To buy credit in the stock market, it is necessary to provide collateral like a bank; In the stock exchange, this collateral is the portfolio of individuals whose stock exchange organization has determined a floating mechanism for this collateral based on market conditions.
He continued: “Previously, in 1999, the stock exchange organization had raised the credit ratio to 10; But when the market fell and reached the price floor, the credit ratio suddenly reached 65.”
Samadi explained with an example about the credit ratio of 65%: “For example, if you have a portfolio of 100 million in a brokerage, the brokerage can credit up to 65% of it to the shareholder. Of course, this 65% is not the same for all markets; In the credit ratio, the first and second markets of the stock exchange are first, followed by the first and second over-the-counter markets and finally the market.
This capital market activist stated: “According to the new decree, the 65% credit ratio has been reduced to 50%. Of course, in order not to get into trouble and become a margin call, the brokerages did not comply with this ceiling and eventually allocated 10 to 30 credits to the customer.
He emphasized: “Therefore, this resolution will not create a special challenge in the market for the time being; Because until now, the brokerage usually allocated 10 to 30 percent credit and only used a credit factor of 65 for special and VIP customers.
Reducing the stock market risk by reducing the credit ratio
In response to the question whether reducing the credit ratio is a right decision, Samadi said: “Reducing the credit ratio is a completely right decision. “Based on the increase in the risk of the stock market, which increases the share price and the total index, the stock exchange organization reduces the credit ratio in the market.”
According to this capital market expert, by reducing the amount of credit for each person, the brokerage can allocate this amount of credit to another customer; Because the credit volume of brokerages is limited. He continued: “Reducing the credit ratio was the right decision that the stock exchange organization made based on the growth of the market.”
Samadi said that this resolution can create a challenge in the market: “Reducing the credit ratio cannot create a risk in the market; Because the brokerages originally considered a 10-30% credit ratio so that if the shareholder’s portfolio falls, they will not easily make a margin call.
This stock market activist explained: “credit people, especially shareholders who receive heavy credit, make decisions with excitement and emotion at critical times; Because they have to criticize the series. Because the loss increases suddenly and in leaps and bounds.
He explained: “As the credit ratio decreases, credit customers do not show emotional behavior as a risk in the market. For example, when the credit ratio is 10%, the sale will be more calm and heavy correction and emotional situation will not occur in the stock market.
According to the conditions of the capital market from the beginning of the year until today, it seems that reducing the credit ratio can save the market from heavy negative emotions and allow the transaction process to proceed in a reasonable and logical manner.