SEBI issues Circular on cut-off time for determining minimum threshold of margins to be collected from clients

Dec 02, 2019 | by Avantis RegTech Legal Research Team

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The Securities Exchange Board of India (SEBI) on November 29, 2019, has issued Circular on the cut-off time for determining minimum threshold of margins to be collected from clients vide Circular SEBI/HO/CDMRD/DRMP/CIR/P/2016/80 dated September 07, 2016 and Circular SEBI/HO/CDMRD/DRMP/CIR/P/2019/73 dated June 20, 2019 which prescribes mechanism for levying penalties on short-collection or non-collection of Margins. The Circular shall come into effect from April 01, 2020.

Considering the feedbacks received from market participants regarding the collection of current report margins from the clients in case of clearing corporations which was till the End of Day (EOD), the cut-off time for the purpose of determining minimum threshold of margins to be collected by members from their clients has been made up to 5:00 pm. Further for commodity derivative contracts having trading till 5:00 PM, margin collection from clients shall be on EOD basis.

 The Risk Parameter File (RPF) which is to be generated at cut-off time shall be applied on clients’ EOD portfolio for the purpose of determining minimum threshold of margin to be collected from clients by members.

Similarly for the purpose of determining minimum threshold of Extreme Loss Margin (ELM) to be collected from clients, EOD client portfolio shall be valued at the half hour weighted average trade price at the cut-off time of 5:00 pm.

[SEBI/HO/CDMRD/DRMP/CIR/P/2019/149]


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