The National Stock Exchange (NSE) has relaxed the penalty provisions related to the implementation of the new margin regime. The Securities and Exchange Board of India (SEBI) had initiated a change in margin collection norms from September 1 but the process did not see a smooth pick-up, as it was marred by tech glitches and chaos. This chaos has resulted in a significant fall in derivative positions.

“It has been decided to not levy penalty for client margin short/non-collection and reporting in the cash and derivatives segment. This provision shall be applicable for a period of 15 days — from September 1, 2020 to September 15, 2020 — to facilitate a smooth transition for members to the new system,” the NSE said in a circular issued on late Thursday evening.

Trading in the stock market had been disrupted for three days this week, with pay-in and pay-out getting delayed for the first time in 25 years on the NSE. The pay-in, pay-out and collateral management system of the National Securities Clearing Corporation Ltd, a wholly-owned subsidiary of NSE, was affected.

On Thursday, brokers were left frustrated with the tech systems of exchange clearing corporations (CCs) and depository participants (DPs) that were jammed due to overload. Margins collected for trading limits were not reflecting correctly with the CCs, brokers said. In the past three days, share auctions due to margin shortfall shot up to more than ₹100 crore, data showed.

Pay-in and pay-out of funds, which in simple terms is debit and credit, too were disrupted for the third straight day on Thursday, brokers said. The stock market follows a T+2 (today+2) fund settlement cycle and entries are settled at 10.30 am every day. Monday’s pay-in took place at 10 pm on Wednesday and pay-out at 4 am on Thursday. The T+2 cycle was disrupted for the first time in the 25-year history of stock market trading at the NSE. Tuesday’s pay-in took place at 4 pm.

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