Hedgers to benefit as market regulator may lower margin for F&O trades

The Securities and Exchange Board of India had appointed a Risk Management Review Committee to look at the margin collection system in India

Market participants in the derivatives market may be in for a breather as the cost of hedging in the derivatives market may reduce if the recommendations of a risk review committee are accepted. 

The Securities and Exchange Board of India (Sebi) had appointed a Risk Management Review Committee to look at the margin collection system in India. The committee has recommended that overall margining for hedged positions will be linked to the risk involved rather than total exposure. This could result in lower costs for hedgers. 

“India used to have more of an exposure-heavy margining system rather than risk-based margining.