SEBI Proposes Overhaul Of Margin Trading Facility Rules: What You Need To Know

Given the continued rise in trading volumes under the Margin Trading Facility, SEBI has suggested a number of adjustments to the system, such as more funding options for brokers, higher exposure limits and operational relaxations.

On Thursday, SEBI, the market regulator, suggested several amendments to the Margin Trading Facility laws. SEBI suggested raising the minimum net-worth standard for brokers providing MTFs from Rs. 3 crore to Rs. 5 crore in its consultation paper. “The regulator indicated that the minimum net worth needed for a stockbroker to offer an MTF could be raised to Rs. 5 crore.”

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According to the plan, a sum equivalent to the lesser of 50 percent of net worth or twice the minimum net worth necessary for brokerage activities would be ring-fenced and the remaining net worth might be used for MTF within an exposure limit, according to the reports.

Additionally, as said above, raising the minimum net-worth floor to Rs. 5 crore, rejecting lower cash collateral margins and implementing a 30 day window to manage restricted shares are among the recommendations. The final circular is anticipated to be released after July 9, when SEBI has requested comments on these improvements.