Sebi Directs Brokers to Collect All Margins Except VaR and ELM by T+1 Settlement Day
Sebi, the markets regulator, has directed brokers to collect all other margins, except Value at Risk (VaR) and Extreme Loss Margin (ELM), by the T+1 settlement day. This decision is due to the shift from T+2 to T+1 settlement cycle.
Trading members and clearing members are required to mandatorily collect upfront VaR margins and ELM from their clients. Earlier, they had time till T+2 working days to collect margins (except VaR margins and ELM) from their clients.
Effective January 27, 2023, the settlement cycle has been reduced from T+2 to T+1 across all scrips in the cash market. To ensure a more robust risk management framework, Sebi has decided that TMs (trading members) and CMs (clearing members) shall be required to collect margins (except VaR margins and ELM) from their clients by the settlement day.
Clients still need to pay margins when calls are made. The time till the settlement day is allowed only for avoiding penalties, not as an extension for clients to delay payments. If the client completes pay-in by the settlement day, no penalty is applied. However, if the payment is not made by the settlement day, a penalty will be applied.
The new framework will be applicable with immediate effect.
Reference : https://economictimes.indiatimes.com/markets/stocks/news/sebi-comes-out-with-timelines-for-brokers-to-collect-margins/articleshow/120700272.cms
