Pledged shares: Now, pay higher margin to deal in F&O

KS Badri Narayanan Chennai | Updated on October 25, 2019

Effective November 1, the F&O players have to shell out 35 per cent extra margin in shares where promoters pledged their holding by more than 25 per cent of the total equity capital

Are you an avid futures & options (F&O) trader? Then, you may have to pay extra margin of 35 per cent to deal in shares of companies whose promoters have pledged their holding by more than 25 per cent of the total equity capital of the company and have a market capitalisation of over Rs 1,000 crore.

The other criteria to attract higher margin include concentration of the top 25 clients in trading during the last 30 days is 30 per cent or more and if the price variation between high and low of a scrip is greater than 40 per cent in the last 3 months.

A recent Kotak Securities report based on June-quarter data said that companies whose promoters have pledged more than 95 per cent of their holdings include Reliance Infrastructure, Gayatri Projects and Reliance Capital, while companies such as Eveready Industries, Lemon Tree Hotels, Orient Electric, Chambal Fertilisers and Jindal Steel and Power saw the highest increase in pledged promoter holdings.

According to analysts, this will not have much impact on the ground, as most of the volatile stocks have already been eliminated from F&O trading by the exchanges.

Read also: All you wanted to know about promoter pledging

“Most of the stock value has either fallen well below the Rs 1,000-crore market capitalisation level due to a vertical fall or have already been removed by the NSE from F&O trading,” said a Chennai-based analyst with a domestic brokerage firm. “The market-capitalisation of other F&O stocks rule well above the Rs 1,000 crore-level,” he added.

So, traders should ascertain the margin on stocks, before dabbling in F&O, he cautioned.

The surveillance measure is without prejudice to the right of SEBI and exchanges to take any other surveillance measures, in any manner, on a case-to-case basis or holistically depending upon the situation and circumstances as may be warranted, the NSE said in the statement.

This circular is being issued by the exchange as a surveillance measure with a view to ensure market safety and safeguard the interests of investors, it added.



Published on October 25, 2019

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