Securities Firms' 'Collateral Deficiency Accounts' Double in One Month

Due to the stock price decline, the fund ratio also falls
Additional surge expected if the 5-day crash is reflected

As stock prices fell, the number of margin deficit accounts at major securities firms nearly doubled within a month.

According to NH Investment & Securities, Korea Investment & Securities, Samsung Securities, and Hana Securities on the 5th, the number of margin deficit accounts was counted at 17,000 as of the 2nd. This is an 89.8% increase from 8,953 accounts on the 2nd of last month. It means the number nearly doubled in one month. A "margin deficit account" refers to an account where the investor's total assets and the funds borrowed from the securities firm for investment fall below the collateral ratio set by the securities firm. Investors must deposit funds within the deadline to avoid a margin deficit. Otherwise, they face a "forced sale" by the securities firm, which forcibly sells stocks to recover funds.

Samsung Securities. Photo by Yongjun Cho jun21@

From July 2nd for one month, the KOSPI and KOSDAQ fell by 3.76% and 6.09%, respectively. When reflecting the stock prices on this day (the 5th), the number of margin deficit accounts is expected to increase significantly. On this day, the KOSPI and KOSDAQ closed down 8.77% and 11.30%, respectively, compared to the previous session.

Meanwhile, the balance of credit transaction loans was 19.4226 trillion won as of the 2nd, according to the Korea Financial Investment Association. This amount decreased by 599.3 billion won from 20.0219 trillion won a month ago.

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