ANMI approaches Sebi to reduce peak margin to 50%

Mumbai: ANMI, the pan-Indian body of brokers, has asked market regulator Sebi to reduce the maximum applicable margin from the current level of 75% to 50% for investors. He also said that even if the maximum margin is raised to 100%, as is expected from September 1 this year as part of a Sebi mandate, ANMI has asked the regulator to allow investors to not pay only 50% of the margin while brokers pay the balance at 50%.
Previously, ANMI had submitted to Sebi a detailed presentation on the impact of margins on transactions of Bank Nifty, one of the most popular products in the NSE derivatives segment, which showed that the maximum margin of between 25 % and 33% provide adequate security. for the market. Taking this into account, ANMI estimates that a 50% margin on investors could be more than enough to reduce trade risks in the market.
The presentation also pointed out that imposing a maximum margin of 100% could have a negative effect on the behavior of traders in the market. These include a change in behavior in the trading pattern, longer or deeper stop losses, converting low-risk daily trades to high-risk positional trades, booking trades that generate profit but postpone trades that result in losses and switching to buying options to extract leverage. In private, brokers have said that a maximum margin at the 100% level could actually increase losses rather than minimize them.

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