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This is an archive article published on December 25, 2004
Panel for margin trading changes
The Secondary Markets Advisory Committee SMAC set up by the Securities and Exchange Board of India Sebi has proposed several changes in ...
The Secondary Markets Advisory Committee SMAC set up by the Securities and Exchange Board of India Sebi has proposed several changes in the margin trading facility as well as in the provisions for the securities lending scheme SLS.
The panel, in its recommendations pertaining to margin trading, has suggested expanding the list of securities for which the facility is available. It said all initial public offerings IPOs and which meet the conditions for inclusion in the derivatives segment of the stock exchanges SEs may be made available for margin trading. It has also recommended relaxation of the margining requirement for brokers.
The recommendations have been published on Sebi8217;s website to elicit public comments.
SMAC has recommended that fixed deposits with banks and bank guarantee provided by the brokers may be treated as cash equivalents and be considered as acceptable form of initial and maintenance margins for the purpose of availing the margin trading facility.
It also said under the existing norms, before providing such facility to a client who has availed the margin trading facility from another broker, the broker must obtain a no-objection certificate in writing from the other broker. But there was no time limit specified for this. It has been decided that the other broker would be obliged to convey his objection, if any, within 21 days, failing which the broker would be free to proceed with providing the margin trading facility to the client.
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