The margins shall be raised to 100 per cent from September 1, in line with the market regulator
The new peak margin norms of 75 per cent imposed by the Securities and Exchange Board of India (Sebi) to curb speculative buying and selling have kicked in as we speak i.e. June 1, 2021. Margin buying and selling implies that merchants buy shares by paying a marginal quantity of the particular worth to the brokerages involved. Under the brand new margin guidelines, 75 per cent of the required margin for all fairness and derivatives positions shall be collected upfront by brokerages.
Sebi has been implementing new margin buying and selling guidelines in a phased method from final 12 months. Between December 2020 and February 2021, merchants needed to pay at the least 25 per cent of the height margin. The margin was raised to 50 per cent between March and May, and shall be 75 per cent from June to August. The margins shall be raised to 100 per cent from September 1, in line with the market regulator.
Moreover, underneath the brand new system, buyers will now not be premitted to make use of shares mendacity of their demat accounts to make margin funds until such shares are pledged with the dealer after a correct consumer authorisation course of. The consumer authorisation will happen by e mail and a one-time password (OTP). And purchasers must pay a penalty for any shortfall in margins.
The new margin guidelines might influence influence intraday buying and selling volumes as brokerages wouldn’t have the ability to present the identical leverage as was completed earlier. On the opposite hand, the brand new margin system is more likely to strengthen the danger administration system and make the markets extra environment friendly in the long run.
