Brokers want status-quo on SEBI margin rules

Our Bureau Mumbai | Updated on February 26, 2021

Stock brokers body ANMI has requested SEBI to maintain a status-quo on the derivative margin rules and not bring in a 50 per cent margin requirement under the new rules.

SEBI has introduced new margin rules, which are based on the peak theory and have capped the leverage possible in derivatives to four times the margin. This kicked in from December 1. But from March, the leverage cap will be two times instead of four currently.

“Our members have requested for continuation of 25 percent margin requirement as it has been demonstrated that there have not been any reported instances of default due to this requirement and has taken care of the intra-day volumes in spite of volatility without any perceived risk in the system. Going to 50 per cent from current 25 per cent would affect the business of brokers and clients especially when the current norms seem to be sufficient to manage risks due to intra-day volatility,” ANMI said in its letter to SEBI.

The NSE has warned brokers against facilitating special arrangements with non-banking financial companies to fund the peak margin requirements. It said trading members should not finance or act as a conduit or front for financing any secondary market transactions or margin requirements for their clients unless it conforms to the regulatory provisions of Margin Trading Facility and Securities Lending and Borrowing mechanisms.

Published on February 26, 2021

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