InvestorQ : How do you see the new peak margin systems from 01 Jun to impact trading volumes?
sarah Leo made post

How do you see the new peak margin systems from 01 Jun to impact trading volumes?

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Rashi Mehra answered.
2 weeks ago
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Firstly, this is not a new system, but the system has been in existence from October last year. There was a phased enhancement of minimum margins that had been worked out to make things easy for brokers. Under that time table, from June 2021 SEBI’s peak margin norms of 75% to curb speculative trading will be effective.

What this means is that not less than 75% of the required margin for any equity or F&O position will have to be collected upfront by the broker. As I mentioned, the peak margin norms were escalated gradually from 25% in Feb-21 to 75% in Jun-21. Effective from 01-Sep 2021, the applicable margins to be collected upfront by the broker will be 100%.

Any breach will attract penalties from the broker and the client. This is expected to impact intraday trading volumes. However, this impact is most likely to be short term in nature as long term, the markets normally adjust very effectively to the new margining norms. It could reduce volumes where brokers relied too much on relationship based leverage.

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