The Selection
"Issues Eligible for Standardized Margin Transactions"
Each stock exchange selects certain stocks based on certain criteria as stocks that can be traded through Standardized Margin Transactions, and these selected stocks are called "Issues Eligible for Standardized Margin Transactions". Additionally, "Issues Eligible for Standardized Margin Transactions" are also "Issues Eligible for Loans for Margin Transactions" that can be traded through Loans for Margin Transactions.
Negotiable Margin Transactions are generally covering all listed stocks, but in practice, eligible stocks that can be traded depend on procurement power of each securities company that handle Negotiable Margin Transactions.
An Issue Eligible for Negotiable Margin Transactions does not necessarily mean it is designated as an Issue Eligible for Standardized Margin Transactions. According to each exchange rules, only Issues Eligible for Standardized Margin Transactions can be traded on Standardized Margin Transactions.
Additionally, Issues Ineligible for Standardized Margin Transactions are not Issues Eligible for Loans for Margin Transactions and Participants of Loans for Margin Transactions (securities companies etc., hereinafter, Participants) cannot use Loans for Margin Transactions which lends funds and/or stocks necessary for settling the Negotiable Margin Transactions.
Note that, JSF provides "Loans for Negotiable Margin Transactions", which lends funds necessary for settling Negotiable Margin Buying.
"Issues Eligible for Fund Loan and Stock Loan" and "Issues Eligible Only for Fund Loan"
Of the "Issues Eligible for Loans for Margin Transactions", each stock exchange classifies them into "Issues Eligible for Fund Loan and Stock Loan", which Participants can borrow funds and stocks from securities finance companies, and "Issues Eligible Only for Fund Loan", which securities companies can borrow only funds from securities finance companies.
In other words, investors can "buy" and "sell" stocks that are Issues Eligible for Fund Loan and Stock Loan through Standardized Margin Transactions, but if the stock is an Issue Eligible Only for Fund Loan, they can only "buy" it through Standardized Margin Transactions.
The criteria for selection
The selection of the Issues Eligible for Standardized Margin Transactions is based on the certain criteria prescribed by rules concerning selection of Issues Eligible for Standardized Margin Transactions and Loans for Margin Transactions of each stock exchange.
Of the Issues Eligible for Standardized Margin Transactions, each stock exchange and securities finance company select Issues Eligible for Fund Loan and Stock Loan that clear the selection criteria. For Issues Eligible for Fund Loan and Stock Loan, "short selling" is possible, so strict criteria are required because securities finance companies need to be able to stably procure the stocks.
Note that among Issues Eligible for Standardized Margin Transactions, if it does not clear the selection criteria for Issues Eligible for Fund Loan and Stock Loan, all are selected as Issues Eligible Only for Fund Loan by each stock exchange.
An overview of the selection criteria for stocks (Tokyo Stock Exchange) is as follows:
Note: For selection criteria of non-stock or other stock exchanges, please refer to the various rules of each stock exchange.
| Issues Eligible for Standardized Margin Transactions | ||
|---|---|---|
| （Issues Eligible Only for Fund Loan） | Issues Eligible for Fund Loan and Stock Loan | |
| Number of tradable shares | ー | 17,000 units or more |
| Number of shareholders | ー | 1,700 or more |
| Trading volume, etc. | The first contract price has been determined after listing. | Average monthly trading volume is 100 units or more, and the number of active trading days is 80% or more during the past 6 months. |
| Business performance | No excess liabilities in the previous business year | ー（Same as the left in effect） |
| Others | The issue does not fall under any of the following conditions:
|
The issue does not fall under any of the following conditions:
|
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