SEBI New Announcement On Segregation Of Margin
SEBI Implements New Rules: What It Means for Traders, The Indian stock market has seen some major changes in recent years, and now the Securities and Exchange Board of India (SEBI) is introducing new rules starting February 13, 2023. This new system aims to protect client collateral and prevent any form of misuse by requiring the segregation of client collateral at the client level. In this blog post, we will be discussing the two major implications of these new rules for traders.
1. Fund and Share Transfers:
The new rules will impact the way traders transfer funds and shares to the exchange. If a client deposits new funds or shares during the day, the process of transferring them to the exchange, allocating them to the client's account, and providing a new trading limit will take between 15 to 30 minutes for funds and a minimum of two hours for shares. This is because the new limit can only be given after the exchange has confirmed receipt of the shares.
2. Margin Requirements: Traders are required to pay margins for the sale of shares, and if a client has no margin or ledger balance and no shares are pledged, they will incur a penalty of upfront margin allocation short if they sell old shares of DP or shares invested in an IPO. To avoid this penalty, the broker must pay in advance, inform the exchange, and the exchange will remove the penalty. However, starting from Monday, no new positions can be taken immediately against early pay-in. This means that against the shares sold today, a new position can only be created the next day. In exceptional cases, during the day, a new position can be taken only after receiving confirmation from the exchange, which currently takes more than 2 hours. Customers who sell old shares and want to withdraw during the day, but have no other margin, will have to pay in early, and the shares can only be sold after they are paid out the next day.
Conclusion:
SEBI's new rules are designed to make the markets safer and ensure that client collateral is not misused. The focus on safety is commendable, but it's important for traders to understand how these new rules will impact their day-to-day operations. By having a clear understanding of these changes, traders can better prepare and make informed decisions in the future. If you have any further questions or concerns, don't hesitate to reach out to your broker for clarification.
