Sebi will not revise upfront margin rules: Ajay Tyagi

NEW DELHI: Securities and Exchange Board of India (Sebi) chief Ajay Tyagi on Tuesday clarified that the markets regulator was not considering revising the upfront margin rules, which saw a turbulent implementation early in September.

Sebi introduced the upfront margin rules earlier this month, which made it mandatory to collect 20 per cent margins before placing an order. It also introduced a revamped margin pledging process from September 1.

“We took this decision after much deliberation. There were some teething problems because stakeholders did not make an effort to get their system ready by August end that led to increased loan on clearing corporations and depositories,” said Tyagi, Chairman, Sebi.

“System has been stabilised by now. It is for everyone’s good. That is why we are not thinking of changing it for now,” he said.

Following the implementation of the new margin pledge and repledge process, traders during the first week complained that the system was not working efficiently. Many traders also blamed the new rules for a decrease in trading volume.

Turnover data available with stock exchanges suggests a mixed impact of Sebi's new margin rule, with daily cash market turnover falling up to 29 per cent since September 1 over August, but daily derivatives turnover rising 15 per cent during the same period, a Business Today report said.

Depositories and Clearing Corporations had earlier said the transition to the new margin pledge process has stabilised, assuaging concerns of investors and brokers who have been trying to embrace the new norms.