Under the new system, securities held in clients` Demat accounts cannot be used for margin payment, but must be pledged to the broker after the client`s authorisation and pledged to clearing companies and exchanges. Customer authorization must be obtained via a one-time password (OTP) and emails. Any shortfall in the collection of margins will result in a penalty for customers and trading members. In an earlier letter to Sebi, the Brokerage Industries Association said the proposed margin was 300% higher than the actual levy should have been. It should be noted that, under the new standards, clearing companies will aim for a minimum margin throughout the session and will require brokers to collect additional margins from clients if they fall below. Investment dealers who do not should expect a penalty. «The impact of Phase 3 of the initial margin standards (75% margin requirement) was seen in the treasury and commodities segments, while derivatives volumes grew month-over-month,» ICICI Securities said in a note. The brokers` warning follows Wednesday`s increase in the pre-margin requirement to 100% Deepak Jasani, head of retail research at HDFC Securities Ltd, said the higher initial margin will affect trading volume if the overall trend in stock markets becomes sideways or bearish. «With widespread optimism, investors are generally willing to trade even with higher margin requirements in the stock markets,» he said.

According to Kamath, another unintended second-order effect will be that the minimum margin required will most likely have to be even higher than the spread (standard portfolio risk analysis) plus exposure to F&O positions. Under the new maximum margin standards, investment dealers are required to collect minimum margins for leverage-based trades in advance, compared to the previous practice of collecting them at the end of the day. Markets could see a sharp drop in trading volume and a reduction in liquidity in the coming days, as the capital markets regulator implements its initial margin standard of 100 percent, warned the Association of National Exchanges Members of India (Anmi), one of the country`s largest securities dealer associations. Earlier this month, the anmi investment dealers` association had written to sebi and the Ministry of Finance to express the proposal to have a 100% higher margin for intraday transactions. SEBI`s new peak margin rules will come into effect on September 1. Buying and selling shares now requires an initial margin. If you want to buy Reliance Industries shares worth Rs 1 lakh, you must have Rs 20,000 in cash in your account and the remaining money must be paid within two days. Margins will be increased to 100% from September 1, according to the market regulator, as part of the final phase of the new rules on peak margins, securities brokers will be subject to a penalty if the margins collected by traders in the case of spot market shares are less than 100% of the trading value and additional scope + exposure for trading products. Derivatives.

The Securities and Exchange Board of India`s (Sebi) new mandate in margin trading, which gradually came into effect last year, increased the initial requirement to 100% from Wednesday. Sebi increased the initial margin requirement from 25% to 50% effective March 1, 2021 and to 75% in June. Nithin Kamath, founder and CEO of Zerodha, a popular trading platform, tweeted: «The dreaded day for brokers, exchanges, intraday traders has arrived.» Under the new peak margin standards, margin requirements are calculated four times during each trading session. It will also include intraday trading positions. Sebi decided last year to introduce maximum margin standards to curb speculative transactions and limit the leverage offered by securities dealers to their clients. New seBI Margin Rules: The New Margin Rules of the Securities and Exchange Board of India (SEBI) will come into effect on Wednesday (1 September). Under the new maximum margin rule, traders must provide a 100% margin in advance for their trades. It is likely that the new rule will affect intraday trading. In addition, under the new system, investors are no longer required to use shares held in their Demat accounts for margin payments, unless those shares are pledged to the broker following an appropriate client authorization process. The customer`s authorization is done by e-mail and one-time password (OTP). And customers have to pay a penalty for any lack of margins. Funds from shares sold on delivery today cannot be used for new same-day transactions.

You can use the money for new transactions the next day. For example, you sold Shares of Reliance worth Rs 100,000 today. You can`t use that money today to buy new shares of other companies. However, there will be no changes to the rules for options and futures. Traders are not happy with the new peak margin standards as they now have to park more money to meet the margin requirements for trading. In fact, trading futures and options (F&O) is also becoming more expensive. The new margin rules may affect the volume of intraday trading, as brokers would not be able to offer the same leverage as before. On the other hand, the new margin system should strengthen the risk management system and make markets more efficient in the long term. K.K. Maheshwari, chairman of Anmi, told Mint that the new maximum margin will have an impact on trading volume. «We will also see a reduction in intraday position in the derivatives segment. In addition, volumes are likely to shift from the futures segment to the options segment as traders will try to get better leverage.

We will also see the conversion of long-risk trading into higher-risk trading with a longer or lower stop loss,» he said. The new 75% maximum margin standards imposed by the Securities and Exchange Board of India (Sebi) to curb speculative trading came into effect today, June 1, 2021. Margin trading means that traders buy stocks by paying a marginal amount of the actual value to the brokers in question. Under the new margin rules, 75% of the margin required for all positions in shares and derivatives will be withdrawn in advance by brokers. In particular, SEBI introduced the new maximum margin rule for day traders a year ago. It will be implemented gradually. In the first phase, traders should hold at least 25% of the maximum margin between December 2020 and February 2021. This margin was increased to 50% in the second phase between March and May and is to be increased to 75% in the third phase between June and August and finally to 100% from 1 September. Since last year, Sebi has gradually introduced new rules for margin trading. Between December 2020 and February 2021, traders had to pay at least 25% of the maximum margin. The margin was increased to 50% between March and May and will be 75% from June to August.

Margins will be raised to 100% from September 1, according to the market regulator. Even traders are disappointed because they have to spend more money to bet on the stock market, especially in intraday and futures trading. It can be noted that traders must also pay a penalty if the maximum margin standards are not met during a trading session. Previously, the investment dealers` association ANMI had called the market regulator`s new maximum margin rule unfair and even called on Sebi to reconsider its maximum margin standards, especially in the context of intraday transactions. According to experts, the new peak margin rules will be a blow to intraday trading, as margins are now increased in advance as opposed to the previous practice of collecting at the end of the day. .