SEBI is coming new margin system in hedged position

Exclusive | SEBI may lower margin requirements for hedged trades in F&O segment

The SEBI-appointed Risk Management Review Committee met on October 16 and agreed to most recommendations of the sub-working group. This group had proposed lower margins for hedged positions and status quo on unhedged derivative positions

Capital and commodities markets regulator Securities and Exchange Board of India (SEBI) plans to reduce margin requirements on certain trades done in the equity and currency derivative segments, sources told Moneycontrol.

The idea behind the reduction is to bring margins on derivative trades in India on par with those levied by global exchanges.

A recent study by EY showed that margins on derivative trades in India are up to 500 times higher compared to global exchanges.



@Riyas_Ahamed Please don’t copy paste the entire article for other sources. That isn’t right or legal.

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Welcome news! I’m very new to options trading and don’t know much about hedging, but what would really have been awesome is if the margins were made more reasonable for just selling/shorting options… Shorting options is much more profitable, but the margin requirement is lot fixed and not calculated as per premium so it’s beyond unreasonable, especially in NRML trades… As I understand it, price of one lot of nifty could be 300 rupees, but margin would still be like 80k rupees in NRML trades :pensive: Anyway, hope those who know hedging are able to make the most of this news :slightly_smiling_face:

Any timelines as in when will this be available on Zerodha ?


This has to officially come out, exchanges need to do required changes, the day it is taken live by exchanges the same day these new margins will be applicable at Zerodha.


Awesome news! :smile:

“However, some trading and clearing members are opposing the move to reduce margins since they earn interest on margins their clients deposit with them.”

What the fck?

It seems, no one wanted retail to participate and earn in FnO?

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First time they are doing something good for retail…lets see what happens…but its a very very welcome step

I don’t think this was done for retail. It is more likely and probable that in the last 1yr margins have increased so much that all Large participants would’ve gone and twisted somebody’s arm.

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I heard that there is going to be a drastic cut in margins for hedged position has it come for implementation or if not when is it proposed to

Just a proposal for now.

This is amazing news.

Does this mean that selling of covered call options will need less margins?
What other strategies will be benefited by this move?

yes all are waiting for this one cheers indian market

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For the selling of the covered call option, how will the corresponding underlying shares be blocked for the position? Do we need to pledge them first?

Very good initiative. I hope this materialises soon. Beneficial to traders across the spectrum.

All hedged strategies where risk and reward are limited will benefit…

I had a chat with another broker… He told that for any hedged strategy, if the exchange does not recognize the position to be hedged, then (for a long futures and Far OTM put buy) there wont be any benefit.

It is not just SEBI… that has been late to this…

I’m not sure… but I think… if the exchanges had been proactive… they could have designed their systems to recognize such trades…

They have not done this so far…
So, it is also necessary to question the sincerity of exchanges w.r.t the intention of helping traders… by recognizing the limited risk of hedged strategies.

Brokers have little play here… because they follow rules of exchange and beyond that they are helpless… If the exchange demands more margin… what can the broker do…

Those who are not complaining about this current high margin situation have ABSOLUTELY NO CLUE how cost-effective other markets are… Just try options trading on ThinkorSwim. They provide a paper trading account…

Put on some spread trades on whichever stock/index you like and then see how much amount is blocked and how much is free to open new trade…

Those who take the time (or have already taken) to do this will understand that we have been living in a DARK AGE…


Then they will understand the importance of this reform.

At least they are doing this now… God bless them…

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