The Hindu Business Line : Exposure margins in cash, F&O hiked

In a move aimed at "ensuring the safety of the stock markets", the National Securities Clearing Corporation has decided to increase the exposure margins in the cash and Futures & Options segments by 50 per cent.

In a circular, the National Stock Exchange said the revised margins would come into effect for positions open on and from April 17. The decision to increase the exposure margins was "in continuance of surveillance review and pursuant to the meeting at SEBI, with a view to ensure market safety and safeguard the interest of investors," the circular said.

As per the revised structure, the exposure margin for stock products would be higher at 7.5 per cent, up by 50 per cent from the existing five per cent. The revised margins in the cash segment also stands at 7.5 per cent. The applicable exposure margin for index products will be 4.5 per cent from next Monday.

Market sources said the decision to hike the exposure margin for F&O would not have a major bearing on the markets. However, the move would help the market to survive broker defaults in the event of a major fall in stock prices, they said.

This is the first hike in margins in F&O since June 17, 2003, indicating that the regulators are taking steps to insulate the markets from major corrections, dealers said.

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