Circular No. FIITC/CUST/13/2001
July 17, 2001
All Foreign Institutional Investors
Custodians of Securities
PAYMENT OF VOLATILITY MARGINS
SEBI vide its circular SMDRP/Policy/Cir-35/98 dated
December 4th, 1998 had made it mandatory for the brokers to
collect margins from clients in all cases where the margin in respect of
the client in the settlement, would work out to be more than Rs. 50,000.
SEBI vide its press release No. PR 38/2001 dated March
5,2001 on Risk Management Measures had prescribed that:
"No exemptions to be allowed in the applicability
of volatility margins to any class of investors. This means that the volatility
margin will also be applicable to the positions of financial institutions,
foreign institutional investors, banks and mutual funds. "
Further, vide press release No. PR 38a/2001 dated March
5, 2001 it was clarified that:
" ...institutions will be required to pay
volatility margin at the applicable rate announced by exchanges on their
net outstanding sale position at the end of day only and not on buy positions.
It is ,therefore , advised that the stipulations as
prescribed in the above press releases are complied with and volatility
margins on net outstanding sale position are paid at the end of day to
the brokers by Foreign Institutional Investors.
A copy of this circular is available at the web page
'Foreign Institutional Investors' on our web site www.sebi.gov.in.
The custodians are requested to bring the contents of this circular to
the notice of their FII clients.
E-MAIL pgupta@ sebi.gov.in
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