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TMI BlogComprehensive Review of Margin Trading FacilityX X X X Extracts X X X X X X X X Extracts X X X X ..... ket participants were examined and deliberated in the Secondary Market Advisory Committee ("SMAC"). Based on the deliberations, the revised framework for Margin Trading Facility are stated as under: Securities Eligible for Margin Trading 3. Equity Shares that are classified as 'Group I security' as per SEBI Master circular No. SEBI/HO/MRD/DP/CIR/P/2016/135 dated December 16, 2016, shall be eligible for margin trading facility. Margin Requirement 4. In order to avail margin trading facility, initial margin required shall be as under; Category of Stock Applicable margin Group I stocks available for trading in the F & O Segment VaR + 3 times of applicable ELM* Group I stocks other than F&O stocks VaR + 5 times of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Liquidation of Securities by the Stock Broker in Case of Default by the Client 9. The stock broker shall list out situations/conditions in which the securities may be liquidated and such situations/conditions shall be included in the "Rights and Obligations Document". The broker shall liquidate the securities, if the client fails to meet the margin call to comply with the conditions as mentioned in this circular or specified in the "Rights and Obligations Document" specified by exchange. 10. However, the broker shall not liquidate or use in any manner the securities of the client in any situation other than the conditions stipulated at para-9 above. Eligibility Requirements for Stock Brokers to Provide Margin Trading Facility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the broker shall ensure that: a) exposure to any single client at any point of time shall not exceed 10% of the broker's maximum allowable exposure, as specified in para 17 above. b) exposure towards stocks purchased under margin trading facility and collateral kept in the form of stocks are well diversified. Stock brokers shall have appropriate Board approved policy in this regard. Disclosure Requirement 19. The stock broker shall disclose to the stock exchanges details on gross exposure towards margin trading facility including name of the client, Category of holding (Promoter/promoter group or Non-promoter), clients' Permanent Account Number ("PAN"), name of the scrips (Collateral stocks and Funded stocks) and if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions, provided that no such modification shall have the effect of diluting any of the conditions laid down in the circular or in the Rights and Obligations document. Maintenance of Records 24. The stock broker shall maintain separate client-wise ledgers for funds and securities of clients availing margin trading facility. 25. The stock broker shall maintain a separate record of details of the funds used and sources of funds for the purpose of margin trading. 26. The books of accounts, maintained by the broker, with respect to the margin trading facility offered by it, shall be audited on a half yearly basis. The stock broker shall submit an auditor's certificate to the exchange within one month from the date of the half year end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vised to:- a. take necessary steps and put in place necessary systems for implementation of this circular. b. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision. c. bring the provisions of this circular to the notice of the member brokers of the stock exchange and also disseminate the circular on the website. 33. This circular is being issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 to protect the interest of investors in securities and to promote the development of, and to regulate the securities market. Yours faithfully Susanta Kumar Das Deputy General Manager e-mail: [email protected] Annexu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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