Bonjour, new guests from small-town India
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
Markets regulator SEBI is planning to rationalise margin system in the equity and commodity derivatives segments as part of its effort to boost liquidity and bring down trading cost, industry officials said. The regulator is expected to come out with the new margining system this week, they added.
The framework has been prepared on the basis of recommendations by the capital markets regulator’s Risk Management Review Committee.
Margin, in market parlance, is the minimum fund or security an investor is required to pay to the stock broker before executing a trade. This is basically part of the money collected by bourses from brokerages upfront, before giving exposure for trading in equity and commodity derivatives.
Under the new framework, the Securities and Exchange Board of India (SEBI) is likely to lower margins for hedged position, which will benefit market participants, especially hedgers, officials said.
The new margin system will be based on standard portfolio analysis of risk-model, developed by NSE Clearing Corporation and International Organization of Securities Commissions’ (IOSCO) principles, they added.
Market participants believe that currently margins are on the higher side as compared to those levied by global exchanges. In addition, there are numerous margins levied by exchanges on members, which pushes up the overall cost of trading. These include initial, premium and assignment margins.
An initial margin paid by the broker is based on the ‘standard portfolio analysis of risk’ model. Also, it charges members a premium margin and an assignment margin, in addition to the initial margin.
Premium margin, charged to members, is the client wise premium amount payable by the buyer of the option and is levied till the completion of pay-in towards the premium settlement. An assignment margin is levied on assigned positions of members till the payment towards settlement obligations is complete.
As part of the margin rationalisation, SEBI is likely to lower margins, which will help market participants to transact more, eventually leading to improved liquidity situation and reduced impact cost.
In November 2019, SEBI had asked trading and clearing members to compulsorily collect upfront certain margins from their clients in the cash segment. The move became effective from January 1, 2020.
Under the guidelines, trading and clearing members need to report to the stock exchange about the about the actual short-collection or non-collection of all margins from clients. From April 1, non-compliance of this would be penalised, which brokers would have to pass on to their clients, which in turn would impact trading volumes.
Derivatives in financial markets typically refer to the forward, future, option or any other hybrid contract of pre-determined fixed duration, linked for the purpose of contract fulfilment to the value of a specified real or financial asset or to an index of securities. Broadly, there are two types of derivative contracts -- futures and options.
A futures contract means a legally binding agreement to buy or sell the underlying security on a future date, while options contract gives the buyer or holder of the contract the right (but not the obligation) to buy or sell the underlying asset at a predetermined price within or at end of a specified period.
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
Citroen’s first vehicle sports a novel design and European interiors. It is also meant to be as comfortable as ...
The pandemic is only the tip of the iceberg that the country’s cash-poor airlines — both regional and national ...
The government is yet to specify the framework of its recently announced old vehicle scrappage policy
With initial public offerings galore, we give you a cheat sheet to score some good grades
Biggest risk in selling funds in a rising scenario is exiting early and missing out on further gains
Go for a standard vector-borne diseases policy if you don’t have a regular health plan
No credit risk is an attraction, but note the nuances
With the public looking beyond mainstream media for reports from the ground, independent digital platforms are ...
While Supreme Court has cleared the way for women seeking longer tenures and senior roles in the Indian Army, ...
Mughal Gardens in the Capital open to visitors — albeit with Covid-19 protocol — for the annual Udyanotsav
Salty, buttery, cheese coated or with maple syrup and bacon — popcorn is lending its adaptable self to gourmet ...
Its name is the starting point of a brand’s journey and can make a big difference in the success sweepstakes
Sober spirits are the in thing
A peek into where ad spends went last year and where they are headed tomorrow
Can Swiggy Instamart disrupt the ecommerce groceries space, currently ruled by the Amazons and Big Baskets? ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor