Update on Peak Margins starting 1st March, 2021
As per SEBI’s Peak Margin norms, starting 1st March, 2021, customers are expected to have 50% of the peak margin available with the broker i.e intraday leverage provided for Equity Cash and F&O Intraday would be 2X going forward. There is no change in Equity Cash Delivery or F&O Overnight margins.
This is part of the phased adoption over the next 6 months each and full adoption is expected to happen by September 1, 2021.
Phase 2 (Mar-May) – The client should have 50% of the peak margin available with the broker.
Phase 3 (Jun-Aug) – In the third phase, SEBI has said that the client should have 75% of the peak margin.
Phase 4 (Sep onwards) – By Sep 2021, clients should have 100% of the peak margin obligation available with the broker during the day.
What is peak margin?
Previously, margin reporting by brokers used to happen only at the end of the day for all the carry-forwarded trades executed by the customer on that particular trading day. Because of this brokers were able to provide higher leverages in intraday (MIS), cover order (CO) and bracket order (BO). Customers were able to trade with lower margins from the prescribed limit of VAR (Value-At-Risk) + ELM (Extreme Loss Margin) for equities and SPAN + Exposure for F&O. Leverages lead to risk at the broker’s end as there could be cases where the customers might not be able to provide the margins at the end of the day. If customer doesn’t provide the margin it leads to a shortfall. In order to solve this problem, SEBI has now mandated all brokers to report the margins multiple times during the day as compared to just once at the end of the day.
You can read more details on the SEBI’s Peak margin norms in the article published by us –
Everything you need to know about SEBI’s Peak Margin norms