SEBI's Revised Framework for Calculating Margin Requirements to Take Effect on 1 August
SEBI (Securities and Exchange Board of India) revised its framework for calculating margin requirements to be considered for intraday snapshots in the derivatives segments.
Under requirements announced in November 2019, brokers in the cash segment are required to collect margins from clients upfront, prior to the trade, to align with practices in the derivatives market.
To enable verification of the upfront collection of margins, SEBI in July 2020 released a framework requiring clearing corporations to send intraday snapshots of client positions and margin requirements to brokers to allow them to calculate any margin shortfalls and related penalties.
In December 2021, SEBI modified its framework to include additional snapshots for the commodity derivatives segment.
In a new circular, SEBI said the margin requirements to be considered for the intra-day snapshots, in derivatives segments, shall be calculated based on the fixed beginning-of-day margin parameters – including all SPAN margin parameters and Extreme Loss Margin requirements.
SEBI said the change is only for the purpose of verification of upfront collection of margins from clients, and that there is no change in the methodology for determining and collecting end-of-day margins. There is also no change in cash segment provisions for the collection and reporting of margins.
The revised framework will become effective from 1 August 2022.
Source: Regulation Asia
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