Will upfront margin collections impact intraday trading in India in a big way?

It is feared that SEBI’s latest circular on upfront collection of margins from clients in the cash segment could lead to a virtual halt on the intraday trades. Currently, intraday trades account for over 80% of the market volumes on a daily basis. SEBI has introduced the concept of peak margin reporting by the clearing corporations as 4 snapshots.

This measure will be rolled out from December 2020 in a phased manner and all brokerages must stop intraday leverage fully by August 2021. This could lead to a substantial shift in volumes from full-service brokers to discount brokers. This will limit leverage to the 4-5X that SEBI permits and not the 20X that some brokers provide to high value clients.

Traders believe this could hit ROI on intraday trading substantially. In short, client fund cannot be used to fund the overall leverage.