SEBI Postpones Margin Rule Implementation

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The Securities and Exchange Board of India (SEBI) has postponed the implementation of the framework related to segregation and monitoring of collateral at client level to May 2, 2022. The reasons for the postponement of the deadline were multiple as clearing corporation’s readiness in terms of implementation of the same wasn’t clear. Similarly, brokers’ back and front office vendors were not fully ready.

“SEBI has received requests from various stakeholders to further extend the aforesaid timeline. After consideration of the same, it has been decided that provisions of the said circular dated July 20, 2021 (apart from provisions of Paragraphs 4 and 5) shall come into force with effect from May 02, 2022,” the regulator said.

In July 2021, SEBI had released a circular asking for a margin requirement of 50% from futures and options traders to reduce risks into the system. The rule came in after a reported misuse of client collateral by trading members and the Karvy Stockbroking scam, where clients’ shares had been pledged illegally as collateral against a loan.

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IE&M Team
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