Securities and Exchange Board of India: Sebi sets timeline for brokers to collect margins

Mumbai: The Securities and Exchange Board of India (Sebi) on Monday asked brokers to collect margins from their clients by T+1 settlement cycle. Brokers are required to mandatorily collect upfront VaR (value at risk) margins and ELM (extreme loss margin) for their clients. They have time till T+2 working days to collect margins except VaR and ELM from their clients. Since January 27,2023, settlement cycle has been reduced from T+2 to T+1 across all scrips in cash market.

“In this regard, based on representation received from the Brokers’ Industry Standards Forum and to ensure a more robust risk management framework, it has been decided that keeping in view the change in the settlement cycles, the TMs/ CMs (trading and clearing members) shall be required to collect margins (except VaR margins and ELM) from clients by settlement day,” Sebi said. It said if client fails to make pay-in by settlement day and the broker doesn’t collect other margins by settlement day, same would result in penalty.