Loans for Margin Transactions Outstanding

Participants of Loans for Margin Transactions (securities companies, etc. hereinafter Participants) first internally balance funds and stocks lent to investors for Standardized Margin Transactions buying and selling. Internal balancing (In-house balancing) refers to the process of offsetting the amount required for fund procurement and the amount required for stock procurement by allocating the purchased stocks deposited from margin buyers as collateral to the stocks lent to margin sellers and allocating the proceeds from the selling of stocks received from margin sellers as collateral to the funds lent to margin buyers.
Next, for the funds and stocks that need to be procured after this internal balancing, Participants procure the portion that they could not procure on their own by using Loans for Margin Transactions provided by securities finance companies.

Securities finance companies aggregate the Applications for Loans for Margin Transactions (hereinafter, Applications) received from Participants and balance them internally. As a result, if the Fund Loan Outstanding exceeds the Stock Loan Outstanding (Fund Over-loaned), the securities finance company procures funds for the over-loaned situation (amount required to procure funds) from the short-term money market, etc. If the Stock Loan Outstanding exceeds the Fund Loan Outstanding (Stock Over-lent), it procures stocks for the over-lent situation (amount required to procure stocks) through Additional Applications and JSF Auction.
※Click here for an explanation of over-lent situation.

Thus, in Standardized Margin Transactions and Loans for Margin Transactions, the required amount of funds and stocks is reduced through internal balancing within securities companies as the first step, and internal balancing within securities finance companies represents the second step.
This two-step internal balancing process results in an extremely efficient procurement structure, as securities finance companies ultimately need to procure only the funds for the over-loaned and shares for the over-lent situation in relation to the Standardized Margin Transactions Outstanding for each issue.

Securities finance companies accept applications for new loan (Loan Applications) and applications for return/repayment of existing outstanding (Return Applications) for all Issues Eligible for Loans for Margin Transactions from all Participants. The number of shares for the Loans for Margin Transactions Outstanding for each issue is calculated by adding the number of shares in Loan Applications to the number of outstanding shares on the previous day for the issue and subtracting the number of shares for Return Applications.

Even when there is no movement in the Standardized Margin Transactions Outstanding, Fund Loan Applications or Fund Return Applications might be made due to changes in the amount of Self-financing (i.e., covering the funds necessary for settlement of Standardized Margin Buying internally, without using Loans for Margin Transactions) depending on the fund-procuring situation and other factors.

Margin Transactions Outstanding and Loans for Margin Transactions Outstanding are also used as indicators of the supply-demand situation in the stock market for each particular issue.

Standardized Margin Transactions have a set Repayment Date and require reverse buying or selling within 6 months of new transactions, which means that Standardized Margin Buying Outstanding is waiting for selling opportunities and Standardized Margin Buying Outstanding is waiting for buying-back opportunities. Therefore, the margin buying balance is an indicator of future selling pressure, while the margin selling balance is an indicator of future buying pressure.
The ratio of margin balance, which is the value obtained by dividing the Margin Buying Outstanding by the Margin Selling Outstanding, indicates greater future selling pressure as it becomes higher and greater future buying pressure as it becomes lower.

To obtain these figures, each stock exchange and PTS operator publishes the Margin Transactions Outstanding by issue at the end of the week. On the other hand, the Loans for Margin Transactions Outstanding and Ratio of Loans for Margin Transactions are published every business day by JSF. Be sure to use this data as a timely indicator of supply-demand.
However, please note that, as explained in this section, there may be discrepancies between the margin transactions outstanding balance and Loans for Margin Transactions Outstanding due to the effect of Self-financing (i.e., not using Loans for Margin Transactions and covering the funds necessary for settlements associated with Standardized Margin Buying internally), etc.
※Click here for an explanation of the Preliminary and Final Data on Loans for Margin Transactions Outstanding.