Only index constituent stocks, stock futures are eligible.
Mumbai: In order to improve the efficiency of use of margin capital by market participants, SEBI on Tuesday announced extension of cross margining across the cash and derivative segments for all categories of market participants.
Earlier, this cross-margining facility was available for institutional trades only.
However, only the index constituent stocks and stock futures will be eligible under the new cross-margining scheme, said a SEBI circular.
Only the Nifty basket of stocks for the time being will be eligible for cross margining, it is reliably learnt.
In May 2008, SEBI had allowed cross-margining across both BSE and NSE; all the stocks F&O trade were eligible. But all this was open for institutional trade only.
Only the same month expiry stock futures and index futures positions will be eligible for cross margining benefit, said SEBI’s circular on Tuesday.
Initially, a spread margin of 25 per cent of the total applicable margin would be levied in the respective cash and derivative segments.
Cross-margining benefit would be computed at client level on an online real time basis and provided to the trading member, who would pass on the benefit to the client, said the circular.
“For institutional investors, however, the cross-margining benefit shall be provided after confirmation of trades,” said SEBI.
Clients will have to maintain a separate arbitrage account with the trading member for all the index constituent stock and stock futures for cross-margining benefit.
This will be in addition to their regular trading account. However, for the purpose of compliance and reporting, the positions across both accounts would be taken together.
Cross-margining will, in turn, be based upon the position of the clients in both cash and derivative segments to the extent they offset each other, in a hierarchy of priority as follows: First, index futures position and constituent stock futures position in derivatives segment; second, Index futures position in derivatives segment and the constituent stock position in cash segment; and third, stock futures position in derivative segment and the position in the corresponding underlying in cash segment.
