Sebi defers implementation of new higher margin norms for derivatives

Capital market regulator Securities and Exchange Board of India (Sebi) has deferred the implementation of norms requiring brokers to collect higher upfront exposure from clients. The new norms were to come into effect from June 1. Instead, they will now come into effect from July 1, the National Securities Clearing Corporation (NSCCL), an arm of the National Stock Exchange (NSE), has said in a circular.

The additional risk management measures were announced to curb speculative trading in the derivatives segment. The measures were announced by way of a circular on May 2. Under the new norms, Sebi said besides collecting initial margin, trading members will have to collect exposure margin, extreme loss margin and calendar spread margin.

Client margins were required to be mark-to-marketed and compulsorily collected and reported to exchange. Brokers, however, were opposed to the norms as they feared volumes could reduce by as much as 20 per cent. Sources say brokers are lobbying with Sebi to water down some of the norms.