Mumbai: The Securities and Exchange Board of India (SEBI) has announced changes to margin requirements for investors using the early pay-in (EPI) facility in the cash market. The move aims to reduce margin requirements for eligible investors who have already delivered securities against their sell transactions.
What Has SEBI Changed?
Under the revised framework, clearing corporations will not collect margins on subsequent buy or sell positions up to the eligible value of securities covered by an accepted EPI request.
The benefit will apply when an investor has a net sell obligation and the clearing corporation has successfully accepted the early pay-in of securities.
This means eligible investors can take fresh positions without providing additional margins up to the permitted EPI value.
How Will Margin Benefit Work?
SEBI said clearing corporations will calculate the available EPI value on the trading day.
The eligible amount will be the lower of two values: securities delivered through EPI or securities sold by the investor.
When investors execute fresh cash-market trades using this benefit, clearing corporations will adjust the eligible EPI value while calculating margin requirements.
The changes follow proposals from the Broker Investor Service Fund, recommendations from SEBI’s Risk Management Review Committee and internal discussions.
When Will Margin Relief Be Withdrawn?
SEBI clarified that the margin benefit will be withdrawn if an investor subsequently squares off the sale position against which EPI relief was claimed.
Any resulting margin shortfall will be blocked from the proprietary collateral of the trading member or clearing member.
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The regulator has also excluded securities traded under the trade-for-trade segment, where transactions are settled on a gross basis.
Brokers Must Strengthen Risk Controls
SEBI has directed trading members to configure their risk management systems to ensure adequate margins remain available.
Investors will be allowed to square off positions linked to EPI benefits or take fresh positions only when sufficient margins are available.
The revised framework seeks to improve margin efficiency while maintaining safeguards against trading and settlement risks.
