Sebi extends cross-margin facility to all participants
Press Trust of India / Mumbai December 2, 2008, 20:30 IST
Retail and other non-institutional investors can now use the margins on derivatives for cash market deals
or vice versa with regulator Securities and Exchange Board of India (Sebi) today bringing them at par with
institutions for cross-margin facility.
\"It has now been decided to revise the existing facility of cross-margining across the cash and derivatives
segments to all categories of market participants,\" Sebi said in a release.
The broadbasing of cross-margin facility would help smooth operations and can help to improve the
sentiments at a time when the stock markets are reeling under liquidity pressure.
As against the existing practice of treating the cash and derivatives positions separately, it enables the
market participants to see their overall position as a basket of cash and derivatives positions.
This will help in improving the efficiency of the use of margin capital by market participants.
This will also help market participants, especially arbitragers, to take an effective and dynamic trading
position. It will help them to effectively use their margins in an efficient manner, NexGen Capitals equity
head Jagannadham Thunuguntla said.
The positions eligible for cross-margining benefits will be the following on priority, the index futures
position and constituent stock futures position in the derivatives segment, index futures position in the
derivatives segment and constituent stock position in the cash segment, stock futures position in the
derivatives segment and the position in the corresponding underlying in the cash segment.