SEBI facilitates the MTF: The Securities and Exchange Board of India ( SEBI ) on Wednesday announced updates to the margin trading facility (MTF) rules. Securities funded through cash collateral will now be allowed as part of maintenance margin for MTFs, offering relief from the need for additional collateral. The decision is in response to requests from market participants through the Industry Standards Forum (ISF) to relax existing MTF regulations. SEBI, in its circular, stressed that securities pledged as collateral and those procured through margin trading should be kept separate and should not be merged for funding calculations.
Cash collateral now accepted
SEBI It has been clarified that when brokers collect cash collateral from clients for margin trades and remit the same to the Clearing Corporation (CC) to meet settlement obligations, these cash collaterals can now be considered as part of maintenance margin. Also, if cash collateral provided by clients is used to acquire financed shares, these shares must be of Group 1 securities. The margin requirement for these shares will be Value at Risk (VaR) plus five times the Extreme Loss Margin, irrespective of their availability in the Futures and Options (F&O) segment. SEBI has also mandated that trading members must report their exposure to margin trades by 6:00 pm on the day following the trade (T+1). This update is expected to streamline margin trading processes and reduce pressure on clients and brokers alike.(With PTI inputs)
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