Announcements

SEBI has prescribed a new set of guidelines focusing primarily on Peak Margin Collection & Reporting, and these guidelines have come into effect from 01-Dec-20. Here’s a quick synopsis on what’s new and how it affects you and your trading activity.

Before we go to Peak Margin, let’s understand the concept of Margin.

WHAT IS MARGIN & MARGIN REPORTING?

Margin Trading allows you to purchase shares by paying only a part of the trading value. Margin refers to the minimum payment that you have to contribute to place your order.

Prior to 01-Dec-20:

• Brokers collected upfront margin only for the derivatives segment
• From 15^-Sept-20, brokers also started collecting upfront margin for Cash segment
• Brokers reported client transactions along with the collected margin to the exchanges and clearing corporations at the end of the day

INTRODUCING PEAK MARGINS

From 01-Dec-20, to calculate the margin obligation, exchanges and clearing corporations will take minimum of 4 random snapshots of trading positions. The highest margin of these 4 snapshots will be considered as the Peak Margin of the day.

EXAMPLE
Snapshot of Positions during the Day	All Values in INR
	Amount	Minimum Margin Requirement (VAR + ELM)	PHASE 1 (01-Dec-20 to 28-Feb-21)
			Minimum Peak Margin Requirement (25% of Minimum Margin Requirement)
Position 1	1,00,000	25,000	6,250
Position 2	1,25,000	31,250	7,812.5
Position 3	50,000	12,500	3,125
Position 4	75,000	18,750	4,687.5
Peak Margin Requirement during the Day			7,812.5
Note: For the above example VAR + ELM is assumed at 25% (20%+5%). Value at Risk (VAR) margin depends on the liquidity of the stock, and varies from scrip to scrip. For instance, for stocks that are part of Group 1 (classified as liquid stocks), the applicable daily VAR is 3.5 times the volatility or 7.5%, whichever is higher. Extreme loss margin (ELM) is computed as 1.5 times the standard deviation of daily returns of the security price in the last six months. Minimum ELM = 5%.

This peak margin will be collected during the day itself, and will be applicable on all segments, including Intraday trades.

WHAT DOES THIS MEAN FOR YOU

• You will need to pay upfront margin before placing any trade across all segments.
• You will need to ensure that you maintain an account balance equal to or more than the peak margin requirement in order to execute your order.
• To avoid margin shortfalls and penalty, Funds Payout will now be processed only pre and post equity market hours (Before 7.30 am and after 5.30 pm).
• Sale benefit for shares that have been sold from your account on the same day is revised to 80% (as compared to 100% prior to 01-Dec-2020). For example, if you sell your holdings worth Rs.1,00,000, you will now get limit/margin against Rs. 80,000.

4-STAGE IMPLEMENTATION

Here’s another important aspect for you to consider. These guidelines will be implemented in a phased manner from 01-Dec-2020 to September 2021, as mentioned in the table below:

	Date Range	Required Upfront Peak Margin (% of the minimum requirement)
Phase 1	01-Dec-20 to 28-Feb-21	25%
Phase 2	01-Mar-21 to 31-May-21	50%
Phase 3	01-Jun-21 to 31-Aug-21	75%
Phase 4	01-Sept-21 onwards	100%

In conclusion, here are 2 recommendations to ensure that you don’t face any disruptions due to inadequate funds:

• Keep your Angel Broking account well-funded at all times
• Pledge your shares lying in your Angel Demat account

For more details, feel free to visit the below links.

• SEBI CIRCULAR
• NSE FAQ

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