Treatment of Rights in Standardized Margin Trading

Exchanges prescribe rules only for treatment of rights pertaining to standardized margin trading. Rules for treatment of rights in negotiable margin trading are agreed upon between the customer and the securities company. This is because in negotiable margin trading, if such shares sold on margin are not held by the securities company, securities companies will be limited to obtaining them based on their own procedures and terms, and a uniform adjustment based on the assumption of borrowing from the securities finance company would not be applicable. As such, the specifics of the adjustment need to be tailored in accordance with the terms of financing applicable to individual securities companies.