Sebi postpones margin rules implementation by one month

Mumbai, July 31 Bringing some relief to stock brokers, the Securities and Exchange Board of India (Sebi) on Friday postponed the implementation of the new rules for upfront margin collection in the cash segment by a month.

The norms will now come into effect from September 1, instead of the previously scheduled August 1.

Further, the regulator has also eased the norms. It said in a circular that if stock brokers collect a minimum 20 per cent upfront margin, then a penalty for short-collection or non-collection of margin shall not be applicable.

"If TM/CM (trading member/clearing member) collects a minimum 20 per cent upfront margin in lieu of VaR and ELM from the client, then penalty for short-collection/non-collection of margin shall not be applicable. However, it is reiterated that the Clearing Corporation shall continue to collect the upfront margin from the TM/CM based on VaR and ELM," it said.

The penalty provision for short-collection or non-collection of upfront margin in the cash segment shall be implemented with effect from September 1, the circular said.

The trading community of late has raised concerns on the new guidelines, and the brokers said that there could be volume crunch apart from initial technical issues.

In another decision, Sebi has permitted using digital signatures for authentication and certification of any filing and submission made to the stock exchanges till December 31.

The market regulator said that it has received a representation from the Institute of Company Secretaries of India (ICSI) stating that due to the Covid-19 pandemic and precautionary measures, company secretaries continue to face operational challenges in carrying out certification and authentication of documents in physical form.

"The extension of Sebi to continue using digital signatures is definitely a way forward to ensure that we keep going with the aid of technology and facilitate a more hygienic and safe means of operation avoiding the need for physical interaction," Sonam Chandwani, Managing Partner at KS Legal & Associates, said.

( With inputs from IANS )