SEBI New Margin Rules: Market regulator Securities and Exchange Board of India’s (SEBI) new margin rules will come into effect from Wednesday (September 1). Under the new peak margin rule, traders will be required to give 100 per cent margin upfront for their trades. It is likely that the new rule will impact intraday trade.
Notably, the SEBI had introduced the new peak margin regulation a year ago for day traders. It is being implemented in a phased manner. In the first phase, traders were supposed to maintain at least 25 per cent of the peak margin between December 2020 and February 2021. This margin was raised to 50 per cent between March and May in the second phase and is proposed to be raised to 75 per cent between June and August in the third phase and finally to 100 per cent from September 1 onwards.
Earlier this month, stock brokers' association Anmi had written to the SEBI as well as the Finance Ministry regarding the proposal to have 100 per cent peak margin for intraday trades.
1. New Margin Rules: How it will affect trading
Buying and selling of shares will require upfront margin from now onwards. For ex- If you want to buy Reliance Industries shares worth Rs 1 lakh, you must have Rs 20,000 in your account as cash and the rest money to be paid within two days.
Major change: If you want to sell Rs 1 lakh worth of Reliance shares from your holdings, for that scenario you also must have a minimum Rs 20,000 in your account. Failing which penalties will be levied. Selling from holding will also require an upfront margin in cash. Therefore, traders can keep extra cash or can pledge other holdings for the stipulated margin required.
2. BTST Closed
Shares bought today cannot be sold tomorrow. For ex - You bought Reliance on Monday. You can only sell those shares after receiving the delivery of shares. T+2 you can sell on Wednesday. You can only sell the shares after you receive them in your DP/only after receiving the delivery of shares.
3. Cash and F&O segments
Funds from shares sold today from delivery cannot be used for new trades the same day. You can use the funds for new trades the next day. For ex - You sold Rs 100,000 worth of Reliance's shares today. You cannot use this money to buy fresh shares of other companies today. However, there will be no changes in Options and Futures rules.