SEBI’s New Margin Rules: SEBI the regulator of the Indian stock market has been concerned about the margin requirements for quite some time. What SEBI believes is that the connection of the risk that the traders are taking both Intraday and delivery basis are much higher as compared to the margins. It can be told as fun, SEBI since to change the rules more often like the movie actors change their dress. There are too many changes in the past few years.
One thing, they kept on increasing the margin. The second thing they made exposure margin compulsory and few years before paying exposure margin were not compulsory for the clients. Third thing, for expires beyond nine months they increase the margin money almost at two types. And then the formula for converting the margin money was also kept on changing. At the end of the day all the changes point to one thing and SEBI new margin rules discourage people with less capital not to trade in the future and people with more capital also should do fewer trades. SEBI has been successful in doing all these things.
SEBI New Margin Rules
There is something called expiry day trade which has caught the fancy of many people and the brokers provide five times fifty times and hundred times, and some brokers give unlimited when they place the order. You have to put the top class order also immediately and whatever the stop class and that amount are there in your account that is enough. Any amount of leverage was considered and there were a lot of quires going around because people were losing money because of this intraday trade, expiry day trade, and so on according to SEBI new margin rule.
- So far if you have a certain amount of money, you have to trade within that money and you are not supposed to be trading for more than that. In case if you trade for more than what you have as long as by the next day morning you transfer the money to the broker’s account then there is no problem if not there will be a margin penalty.
- The margin penalty was half a percent if the margin shortage is less than 1lakh and it is one percent the margin shortage is more than 1 lakh. That is half a percent or one percent per day is for Intraday day trade there are no restrictions.
- SEBI new margin rules say that whenever the market moving violently, whatever is your maximum mtm loss this case when the maximum mtm loss is 1 lakh, so that means there must be an extra amount in the account.
- These rules are applicable slowly in a phased manner. Whatever the status goes is maintained in the market.
- In the process of pledging the transfer of the shares to the brokers account totally
If it is a loss brokers have to pay to the shareholders, in this case, brokers can ask for investors protection fund. Secondly, if I have shares transfer to the brokers’ demand account the dividends are sent to the broker’s account directly. SEBI new margin rules says that the shares must be in a particular shareholder’s account, and pledge will be created and you can trade.