Equity cash, futures volumes dip in June on new peak margin norms

Meanwhile, the average daily trading turnover (ADTV) in the option segment rose six per cent month-on-month

Trading turnover in the equity cash and futures segment fell 8 per cent and 9 per cent month-on-month (MoM), respectively, in June. Experts say the new peak margin norms and sideways movement in the market are the reason for the dip. Meanwhile, the average daily trading turnover (ADTV) in the option segment rose six per cent MoM.

“The fall in volumes is primarily attributable to either the new peak margin requirements or the drying up of investor conviction at current levels, which seems to be a reasonable explanation for Nifty50 touching the 15800-mark and not being able to sustain those levels,” Nirali Shah, Head of Equity Research, Samco Securities said in a recent note.

The 75 per cent peak margin norms came into effect from June 1. Broking industry players this has curtailed the leveraged bets in the system. The impact is mainly felt in the futures segment. One unintended consequence has been that traders have shifted to the riskier options segment.

The norms are being implemented in phases starting December 2020. Between December 2020 and February 2021, traders were supposed to maintain at least 25 per cent of the peak margin. This margin was raised to 50 per cent between March and May. The same has been increased to 75 per until August. And finally to 100 per cent September 1 onwards.