Peak margin rules: Anil Singhvi decodes new framework; cautions traders against overenthusiasm

Urging not to jump the gun, Zee Business Managing Editor Anil Singhvi on Wednesday said the new SEBI circular on peak margins may give relief to brokers, but only after nearly three months. As the framework that reduces the count of calculating margins to once, will be effective from August 1. 

Singhvi while decoding the new circular said, “The peak margins which were calculated four times a day as per the regulator’s requirement earlier will now be done only once a day before the start of the equity markets, which indirectly is helpful for brokers to trade hassle-free.”  

The managing editor noted that it generally becomes tedious to calculate margins every two hours and becomes difficult to trade at the time of a freak trade and sudden high/low move intraday, which likely impacts the margin. 

He explained the new circular doesn’t read about complete waiver from upfront margins or peak margins, rather it has eased the brokers’ stress by calculating margin based on the fixed Beginning of Day (BOD) margin parameters.   

"It has been decided that the margin requirements to be considered for the intra-day snapshots, in derivatives segments (including commodity derivatives), shall be calculated based on the fixed Beginning of Day (BOD) margin parameters,” the market regulator SEBI said in a circular.  

SEBI in circular had clarified that the change is only for the purpose of verification of upfront collection of margins from clients. And no change in the methodology of determination and collection of End of Day (EOD) margin obligation of the client.  

The decision has been taken after considering representations received from market participants and based on deliberations with various stakeholders, the circular had said.