Regulation Department-Division of Policy
MRD/DoP/SE/Cir- 06 /2008
The Executive Directors/Managing Directors/Administrators
Dear Sir / Madam,
Sub:- Margining of
institutional trades in the cash market
- SEBI vide circular dated February 23,
specified the risk management framework for the cash market.
- In order to
provide a level playing field to all the investors in the cash market as
in the case of derivatives market, the aforesaid circular is partially
modified to provide that all institutional trades in the cash market would
be subject to payment of margins as applicable to transactions of other
investors. This would
be implemented with effect from Monday, April 21,
- To begin
with, from April 21, 2008, all institutional trades in the
cash market would be margined on a T+1 basis with margin being collected
from the custodian upon confirmation of the trade.
with effect from June 16, 2008, the collection of margins would
move to an upfront basis.
Stock Exchanges shall issue the necessary guidelines in this regard and
shall put in place the necessary systems to ensure the operationalization
of the above.
- The Stock Exchanges are also advised to:
the software and remove any glitches in its operation well before the
commencement date to avoid any problems in the live environment.
- make necessary amendments
to the relevant bye-laws, rules and regulations for the implementation of
the above decision.
- bring the provisions of
this circular to the notice of the member brokers/clearing members of the
Exchange and also to disseminate the same on the website.
- communicate to SEBI, the
status of the implementation of the provisions of this circular in the
Monthly Development Report.
- This circular is being issued in exercise of powers
conferred under Section 11 (1) of the Securities and Exchange Board of
India Act, 1992, to protect the interests of investors in securities and
to promote the development of, and to regulate the securities market.
S V Murali Dhar Rao