You are here: Home » Markets » News
Business Standard

Brokers to pay penalty for not collecting margin

BS Reporter  |  Mumbai 

The Securities and Exchange Board of India (Sebi) has asked stock exchanges to penalise brokers for short collection or non-collection of margins in the equity derivatives segments.

The regulator’s move is aimed at resisting payment crises in the wake of high volatility recently. Despite a decline of over 10 per cent in the benchmark equity indices — Sensex of the Bombay Stock Exchange and S&P CNX Nifty of the National Stock Exchange — there has been no payment crisis in the stock One reason for this is that there are no high margins.

Sebi has prescribed several slabs for penalty. For instance, if short or non-collection of margins for a client continued for more than three consecutive days, a penalty of 5 per cent of the shortfall amount would be levied for each day of continued shortfall beyond the third day. Similarly, if the practice continues for five days in a month, the penalty of five per cent of the shortfall amount would be levied for each day, during the month, beyond the fifth day of shortfall, Sebi said.

In all, Sebi has specified five such criteria. “If during inspection it is found that a member has falsely reported the margin collected from clients, the member will be penalized 100 per cent of the falsely reported amount, along with suspension of trading for a day in that segment,” Sebi said.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, August 11 2011. 00:18 IST