The Securities and Futures Commission plans to further tighten the share repledging cap on brokerages in the coming 18 months, according to its executive director Alexa Lam. The watchdog yesterday asked lawmakers to approve new rules governing customer margin financing provided by brokers. These include the value of collateral shares a brokerage may repledge to its bank as security for loans being limited to no more than 180 per cent of the amount of its lending to all its clients. Legislators generally supported the proposal and Democratic Party legislator Sin Chung-kai urged the SFC to implement the new rules as soon as possible to avoid a repeat of the infamous collapse of CA Pacific Securities. In 1998, CA Pacific Securities, a small broker with capital of only $16 million, was able to borrow $548 million by repledging $2.5 billion of client shares in collateral. The brokerage's failure led to about 5,000 clients losing money. After the first stage of new rule implementation, the SFC proposes to further lower the repledging limit to 130 per cent or 150 per cent. Ms Lam said it was difficult to set a detailed timetable for every stage of implementation but the SFC will submit the draft regulation to Legislative Council as soon as possible. Sources close to the SFC said the regulator planned to implement the first stage in the next six months and the second stage within the following year. According to the SFC, if the repledging limit were set at 130 per cent, seven of the 84 brokers who have repledged client shares as collateral for bank loans might need to use their own capital or funding sources other than bank loans to comply with the limit. Meanwhile, legislator Emily Lau Wai-hing suggested the SFC should disclose the names of the repledged brokers, providing more information to investors when they select a securities house. Ms Lam said the SFC will consider disclosing the related information both on its website and the brokers' licences.