Volumes in F&O segment to shrink as peak margin rules kick in today

Zerodha expects F&O volumes to be impacted by 20-30%; new norms aimed at discouraging leveraged bets

stocks, sell, share
Premium

Brokers typically offered leverage of 4-8 times for intra-day trading in the F&O segment, which could go as high as 30-40 times

Ashley Coutinho Mumbai
Volumes in the futures and options (F&O) segment are expected to shrink by a third in the coming months as the new peak margin norms come into effect from Tuesday. The F&O segment contributes about 90 per cent to the overall market volumes, nearly half of which is intra-day and heavily reliant on excess leverage.

The maximum intra-day leverage that can be offered by a broker will now be restricted and will keep reducing until September 1, 2021. After this, a broker can provide maximum leverage that is equal to SPAN+exposure for the F&O segment and VaR+ELM (minimum 20 per cent)

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Dec 01 2020 | 6:05 AM IST

Explore News

To read the full story, subscribe to BS Premium now, at just Rs 249/ month.

Key stories on business-standard.com are available only to BS Premium subscribers.

Register to read more on Business-Standard.com