This is probably right way to go for greater benefit. Reduce naked leverage. Increase leverage for hedged. This will change trading paradigm in India and very positively.
I am assuming its regarding status quo on current leverage structure
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I believe for spreads where risk is capped, margins can be up to 1/3rd of before, I may be wrong but we need more details to say accurately.
I think this article talks about the original proposal, margins for hedged positions. I don’t think margin will drop from 80k to 5k as the article says, it might be 65 to 70% lower. So if a position today requires margin of 1lk when the max loss is limited due to positions that hedge each other, new margins will most likely be around 30k. We would have to wait and see.
About intraday leverage, that is a different thread altogether, nothing to do with this. The final news on that will take a few more days.
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from next week Intraday leverage will reduce ?
All the intraday position are also considered as unhedged position.
So status-que on unhedged position mean no change of intraday leverage.
Clearly, all intraday positions are just subset of ‘unhedged positions’.
The actual victory cup is the following quote by
The SEBI-appointed Risk Management Review Committee (RMRC),
“Higher margins result in a lower return on investment (RoI) for a trader."
That mean they are strictly against reducing any kind of leverage (either intraday or positional NRML) which result in a lower return on investment (RoI) for a trader.
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It means, no effect on intraday margins ?
Man I was talking about “intraday leverage”
SEBI has banned brokers to fund our intraday margins.
That’s what I was referring to.
I clearly said about “intraday leverage” too.
SEBI not banned brokers to fund intraday margin at all.
SEBI clearly said brokers can do that with their own money on JAN 8th meet. Most of the brokers are giving intraday leverage with their own money.
Don’t create unnecessary panic now.
And for more info, as “intraday leverage” is calculated on percentage of NRML also, so in future if NRML margin reduces as per SEBI-appointed Risk Management Review Committee (RMRC) proposed (only SPAN) then overall intraday leverage will also increase (as intraday margin requirement will decrease).
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Okay, now I got clarity. Thank you.
The current status is that:
- NSE circular has make this out and out clear that there will be no leverage.
- For that brokers met SEBI. SEBI outright rejected to review its new rules in cash. The fact is that leveraged products were never officially sanctioned and now that NSE is insisting on “collecting upfront”.
- In the meeting SEBI has only "orally’ said that it had no issue with brokers funding the margins with no money. That’s it. No official statement, no rules, no circulars.
- NSE has no mechanism to inspect and monitor as of now. To start with SEBI has suggested/ordered(?) reporting of “peak margin”. The reporting and monitor mechanism to be created by 14 Feb.
- The penalty for “cash rules” will be there only from 1 April.
- Most broker are misleading customers and praying that everything ends well.
Now above are facts.
The guesses are:
- The brokers will propose some leveraged product to the SEBI. which SEBI needs to sanction.
- The risk committee accepts the recomendations about margining and implements them - only span and hedged margins.
The prophecy is:
- If SEBI does nothing till 14 Feb - bye bye intraday leverage.
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FEMA rules clearly says no indian money can be used to fund f&o or any margin trading out of India. So it’s very clear that Indians can’t trade in margin based products but can buy equity overseas by finding through India
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Businessline today !!
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If this news is true than its not going to happen for couple of years 
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@nithin In the above article, is the delay till April true or the other brokers are just spreading more misinformation to keep their clients from panicking?
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There are two things here
-
Collection of cash margin for equity trades - this has been moved to April 1st.
-
Intraday leverage for F&O - this has too many moving pieces currently. I am guessing we should get to know in 3 to 4 weeks from now.
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If hedged pos margin works out it is much bigger leverage than current system without putting whole system at risk. Its a no brainer that what should be the right approach. Volume will increase as more pro participation will happen post margin rationalisation.
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