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Stockbrokers association ANMI has urged market regulator SEBI to reconsider its peak margin norms concerning intra-day trades. In addition, ANMI has said that a 100 per cent levy on intraday trades is unfair since it implies 3.33 times higher than what should be the actual margin. ANMI has told SEBI that there is a disconnect between the margin currently being collected from clients since what has to be collected is supposed to be much lower. ANMI has raised this concern as a 75 per cent upfront margin will be required to trade from June and 100 per cent from September.
According to ANMI, the ideal margin collection should not exceed 33.33 per cent of the SPAN (Standard Portfolio Analysis of Risk) margin.
"Going by the current structure, the margin is 3.33 times higher," ANMI told SEBI. "Nowhere in the world, clients are required to pay upfront peak margins. Already open interest in Nifty is more in Singapore compared to India though it is a product based on Indian stocks. Indian markets are already at a disadvantage compared to SGX in terms of margins, time of trading, transaction cost and taxation. Any further unwarranted restrictions will result in export of business from India to overseas markets," ANMI said.
ANMI believes that the spike in peak margin could lead to changes in the market behaviour by shifting from future to option buying and a shift in the mind-set of people gravitating more towards options trading. This is because options trading just works like a lottery system.
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