Anmi urges Sebi to reconsider the proposal on 100% levy on peak margin

Stock brokers’ association Anmi has urged the markets regulator, Securities and Exchange Board of India (Sebi), to reconsider the proposed 100 per cent levy on intra-day trade peak margins, as the higher-margin will reduce hedging opportunities.

In a letter to Sebi on May 15, the Association of National Exchanges Members of India (Anmi) said there is a great disconnect between what is being collected from clients and what needs to be collected vis-a-vis the attendant risks arising in intraday trades.

It, however, reiterated that brokers are not against the collection of intraday margin levied on clients nor the levy of full margin on the clearing member irrespective of the nature of the trade.

The bookers’ association requested the regulator to reconsider the proposed 100 per cent levy on day trade peak margins as the margin is 300 per cent of what should have been the actual levy.

Sharing its data with the regulator, Anmi pointed out that the rate of overnight margins, levied on intraday trades are almost 3.33x more than what is warranted based on the risks of the trade.

It maintained that the ideal margin based on the attendant risks ideally should not exceed 33.33 per cent of the SPAN (standard portfolio analysis of risks) margin.

“In the current margining structure, the current levy of peak margins is 300 per cent of the margin, which should have been actually levied. The levy of margin being a high multiple on intraday trades is also causing effects elsewhere,” Anmi spokesperson said on Monday.

Also, nowhere in the world, clients are required to pay upfront peak margins.

Already open interest in the Nifty is more in Singapore, though it is a product based on Indian stocks. Indian markets are already at a disadvantage compared to the SGX in terms of margins, time of trading, transaction cost and taxation. Any further unwarranted restrictions will result in the export of business from India to overseas markets, the association said.