India’s securities regulator has introduced a conditional margin waiver for certain same-day cash-market positions backed by early share delivery, while Mint reported some brokers plan to ask how the relief should appear in peak-margin checks.
In a circular dated Oct. 22, the Securities and Exchange Board of India (SEBI) directed clearing corporations to forgo margin collection from trading or clearing members on qualifying follow-on buys or sells, up to the accepted EPI amount. The positions must be taken in the cash segment on the same trade date as an accepted early pay-in (EPI) request, and the client must have a net sale obligation. EPI means shares are delivered to the clearing corporation before the scheduled securities pay-in.
On the trade date, the clearing corporation calculates the available EPI value as the lower of the accepted EPI value and the value of shares sold; that value limits the waiver on subsequent positions. If a client closes the original sale, the EPI value is removed. Any resulting client-level margin shortfall must be blocked from the trading or clearing member’s proprietary collateral. For trade-for-trade securities settled on a gross basis, that shortfall-blocking condition does not apply.
The circular describes how EPI is valued and how client margin is checked, but gives no separate formula for including the relief in peak-margin snapshots. SEBI’s existing framework takes at least four readings of required client margin during the session, at times selected at random. Trading members must configure their risk-management systems so clients can close an EPI-backed sale or take a new position only when the required margin is available.
SEBI cited input from its Risk Management Review Committee, proposals submitted by the Broker Industry Standards Forum and its own deliberations as reasons for the policy. The provisions take effect four months after issuance, on Feb. 22, 2027.
A Mint report published Oct. 29 cited three people familiar with broker outreach to SEBI; one said the effort would not involve every brokerage. Raj Shah, executive director at EPP Securities, told Mint the change could leave smaller and medium-sized brokerages with less cash and capital tied to margin demands. Mint reported that SEBI had not replied to the questions it sent by email.