Sebi Reschedules Margin Rule Implementation deadline to May 2

Sebi Reschedules Margin Rule Implementation deadline to May 2

The Securities and Exchange Board of India (Sebi) announced on Thursday that the framework for segregation and monitoring of collateral at the client level will be implemented on May 2, 2022. Following repeated appeals from parties to the market regulator, the deadline was extended. "Sebi has received demands from a variety of parties to extend the aforementioned timescale even further. After careful study, it has been agreed that the terms of the above mentioned circular dated July 20, 2021 (with the exception of paragraphs 4 and 5) will take effect on May 02, 2022," the regulator said after market hours. To limit risks in the system, Sebi issued a circular in July 2021 requesting a 50 percent margin requirement on futures and options traders. Following reports of trading members misusing customer collateral and the Karvy Stockbroking scam, where clients' shares were pledged illegally as collateral against a loan, the rule was enacted. Market experts applauded the deadline extension, saying that more time would assist all intermediaries prepare for the new margin standards. "Because there will be a lot of changes in technology and operational processes, extra time will assist all intermediaries and MIIs in properly gearing up." Also, certain clarifications are expected, which can now arrive and be implemented," HDFC Securities' whole-time director Ashish Rathi told FE. He went on to say that there were other reasons for the deadline being postponed, including clearing businesses' lack of preparation in terms of execution. Similarly, back and front office vendors for brokers were not fully prepared. "There were also some clarifications from Clearing Corporations pending," Ashish Rathi noted. So far, the increased margin requirements have resulted in two deadline extensions. The rule was supposed to go into effect on December 1, 2021, but it was pushed back to February 28, 2022. Despite the fact that the deadline had been extended twice, some brokers across the country had already begun collecting 50% of cash margins from derivative traders. Source: Financial Express