Market regulator issues guidelines on leveraged intra-day trades

The regulator has asked brokers to collect upfront so-called value at risk (VaR) margin and extreme loss margin (ELM) even for trading in the equity cash segment.

The Securities and Exchange Board of India (Sebi) on Monday issued guidelines curbing the practice of margin trading, which the broking community rued will put an end to leveraged intraday trading and make a huge dent in turnover.

It has asked brokers to collect upfront so-called value at risk (VAR) margin and extreme loss margin (ELM) even for trading in the equity cash segment. This will be implemented in three phases starting December 2020, where brokers will be penalised if margin to clients is more than 25 per cent of the sum of VAR and ELM. From March 2021 and June