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Margins will rise for highly pledged companies, say market players

Some criticised the move, saying traders were being punished for the actions of promoters

Sundar Sethuraman  |  Mumbai 

Investors will have to cough up higher margins while dealing in stocks with high promoter share pledges. Stock exchanges have directed brokers to impose a higher margin on their clients, both in the cash and derivatives segments, for stocks where total promoter pledging exceeds 25 per cent of total equity.

Market players said the move is to mitigate risks arising from liquidation of pledged shares by lenders, in an event where the promoter is not able to provide enough collateral. Recently, several companies had seen their stock prices slide due to invocation and selling of pledged ...

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First Published: Sat, October 26 2019. 00:32 IST
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