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Sebi defers 50:50 margin rules for M&O in new circular


The Securities and Exchange Board of India (SEBI) has postponed the implementation of the 50 percent cash margin rule for futures and options (F&O) traders and the credit default swap segment. credit (CDS) on February 28, 2022, compared to the previous December deadline. 1, 2021.

The regulator cited investor interest, as well as regulation and market development as reasons for the delay, in its recently released circular.

Previous rules allowed investors to fully cover their margins with their securities. But, from 2022, they will need to keep 50% of the cash value in their account as margins to trade in these segments.

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A large part of this is to protect investors against the massive fluctuations and the high risks and perils of leverage, in times of extreme market volatility, stress and bull run.

However, many have warned of the flip side of this regulation. They say it can lead to reduced liquidity in the market and can even upset the fundamental price discovery mechanism of the market. Both results could have a significant impact on market volumes, many brokers and traders said.

(Edited by : Priyanka Deshpande)

First publication: STI


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