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Sebi Boosts Margin Trading Rules
19 Jun
Summary
- Net worth for brokers offering MTF to rise from ₹3 crore to ₹5 crore.
- Brokers can raise MTF funds via non-convertible debentures and debt instruments.
- Average MTF book has exceeded ₹1.1 lakh crore in recent months.
The Securities and Exchange Board of India (Sebi) has initiated a review of its margin trading facility (MTF) framework. The proposed enhancements aim to bolster risk management while easing business operations for brokers. A primary suggestion is to elevate the minimum net worth requirement for brokers offering MTF from ₹3 crore to ₹5 crore.
Further, Sebi suggests expanding funding avenues for brokers. They may soon be able to raise capital for MTF through instruments like non-convertible debentures. This move is expected to enhance risk controls within the growing MTF market.
The average margin trading funding book across Indian exchanges has recently surpassed ₹1.1 lakh crore. Sebi also proposes allowing a wider range of collateral for MTF transactions and enabling fungibility between client trading and MTF accounts for smoother fund and security transfers.
