Here’s an overview of the policies related to collateral accepted for margin pledging:

1. Exchange-Approved Collateral: Stocks, Bonds and MF approved by the Exchange are accepted as collateral.

2. Ineligible Instruments:

   • Lock-in bonds cannot be pledged as collateral.
   • Fractional quantities of mutual funds and ETFs cannot be pledged; pledge requests must be in multiples of 1.

3. High-Risk Stocks:

   • Stocks with a Value at Risk (VAR) of 100% are considered high risk and cannot be pledged. These stocks will be unpledged if the margin is sufficient for your existing position.

4. Member-Wise Pledge Limits:

   • It is possible that some stocks listed as accepted collateral may not be successfully pledged if the member-wise limit on the stock is hit. This limitation will only be identified after the pledge process is initiated, and in such cases, the instrument you provided for pledging may be rejected by the Exchange.

For a detailed list of instruments accepted as collateral, please refer to the attached document.

What Happens When a Stock Moves to the Unapproved List?

When a stock is moved to the Unapproved List, it affects how it can be used as collateral in trading activities. Here’s a breakdown of what happens and the steps to take if you’re impacted by such changes:

Exchange Notification

Each month, the exchange issues an updated list of approved stocks. We closely monitor this list, and if any of your holdings are affected by these updates, you’ll receive a notification 5 days in advance.

Impact on Holdings

1. If No Open Position or Pledge Exists: If you don’t have an open position or a pledge on the affected stock, we will automatically release the pledged stocks.
2. If the Stock Was Used as Collateral for Margin:

• Provide Alternate Collateral: You’ll need to replace the unapproved stock with another approved stock or asset as collateral.
• Liquidate the Stocks: Alternatively, you may choose to sell the stocks to meet margin requirements.

Timeline for Action

By the 1st of every month, unapproved stocks will be released from your account, ensuring all positions and margins are adjusted in line with the current approved stock list.

Recommendation

We suggest reviewing your positions and ensuring you have an alternative plan for collateral or liquidation if necessary. This proactive approach helps you avoid potential issues and maintain compliance with margin requirements.