SEBI extends cross margin facility to all market participants

02 December 2008

The Securities and Exchange Board of India (SEBI) has extended the cross margining facility across cash and derivatives segments to all categories of market participants.

Earlier, the cross margining facility was available for institutional trades only.
 
''In order to improve the efficiency of the use of the margin capital by market participants, it has now been decided to revise the existing facility of cross margining and to extend it across cash and derivatives segments to all categories of market participants.'' SEBI said in a release.

The features of the revised cross margining facility are:

Positions of clients in both cash and derivatives segments to the extent they offset each other shall be considered for cross margining. These will include index futures position and constituent stock futures position in the derivatives segment and stock futures position and the position in the corresponding underlying cash segment

A basket of positions in index constituent stock/stock futures, which is a complete replica of the index in the ratio specified by the exchange/clearing corporation shall be eligible for cross margining benefit.

The positions in the derivatives segment for the stock futures and index futures shall be in the same expiry month to be eligible for cross margining benefit.
 
To begin with, the computation of cross margin would have a spread margin of 25 per cent of the total applicable margin on the eligible off-setting positions and shall be levied in the respective cash and derivative segments.