Bursa Should Regulate This Immediately

The sell down in Sumatec, PDZ and a few small caps with huge volumes caused significant losses and uncertainty to investors and traders. As I have said before, brokers should be allowed to regulate themselves and protect themselves, i.e. manage their own risks.

However, I do not think there are rules currently to stop/regulate the measures to limit margin financing for certain stocks. If a market is hot and heady, like the market was over the last week, ANY brokers would have in their arsenal the CAPACITY and ABILITY to derail sentiment. Even among the brokers, whichever broker that makes the first move will come out smelling like roses, while the rest of the brokers will be left holding the "bag".

I believe that can be misused, or may even be construed as front running if you know the move before hand or is part of management decision to implement the decision. You and I know that any such move during a heated market will send the markets into a tailspin. As much as the losses were, if you knew beforehand, you can save a lot of money or even make money shorting on the way down (prop traders).

May I suggest the following:

a) any move to reduce the marginable amount of a certain stock, or the removal of certain stocks from a brokers' approved list for margin MUST be made public at least 5 working days before actual implementation. Even that is not a solid proposal as the act itself will be sufficient to derail the markets.

b) maybe a better way is for a broker to have issued a warning that they are considering reducing the margin for certain stocks or remove certain stocks, a grace period of 5 business days will have to be in effect before actual announcement of such moves

A warnings would send the right message, but be more orderly. The grace period would be akin to UMA, but it gives investors time to reallocate their positions. The grace period notification should be sufficient to quell speculation from going heady. IF speculation continues to be drastic following the grace period, then its nobody's fault when the broker implements the reduction in margin 5 days after that, or completely takes it off their approved margin list.

The current system is too open for chaos and unfair advantage to whoever calls the first shot. Its also to save the brokers from fighting one another as to who gets to make the RED CARD umpire call first, thus relegating the rest into chaos of picking up the pieces.