Under new rules from the Securities Exchange Board of India (SEBI), individual traders will now be required to bring in 50% of their equity derivatives’ margin requirements in cash from 28th February. This is another step taken by SEBI to reduce risks to the system.
In November 2021, SEBI had postponed this rule to 28th February, 2022. Brokers are now gearing up to implement these new rules as some brokerages have already started collecting additional margins from its clients. Brokers are taking special care to meet these margin requirements since they could be penalised in case of any shortfall.
Markets could see a decline in trading volumes and liquidity will be reduced from these new norms. However, markets will have reduced volatility and lower losses from unforeseen events in the longer run as these strict norms might end up being helpful to the markets and investors.
Highlight by Aman Agarwal.