Is the regulator likely to do a rethink on the upfront margin rules, which have been applied from October 01 this year?

Any rethink of the upfront margin rules does look unlikely at this point in time. In fact, the SEBI chief, Ajay Tyagi, has explicitly ruled out any revision in the upfront margin rules. These new upfront rules were made effective from the first of October.

Tyagi has reiterated that the upfront margin rules had been framed only after due deliberations and internal consultations. Additionally, after talking to stakeholders, the board of SEBI was convinced that it was best option for the Indian conditions.

Brokers have been protesting that the mandatory 20% collection of margins and the new rules on pledge were broker-unfriendly. In addition, the system of charging margins for selling stocks or insisting on early pay-ins was also going against broking volumes.

The chiefs of SEBI and the depositories have clarified that the system had largely stabilized after initial teething problems. After the new rules were implemented, equity volumes have fallen by 29% but F&O volumes are higher by 15%. Brokers must now live with the system.