SEBI slaps fresh curbs to stem slide

With the Sensex plunging to an 18-month low, the Securities and Exchange Board of India (SEBI) today decided to impose an additional 10% margin on "incremental" carry forward position and five% on "concentrated" position in scrips with effect from the next settlement. The decision was taken at a meeting convened by SEBI here with the inter-exchange market surveillance group of the stock exchanges in the backdrop of volatility in stock markets. The latest margin is in addition to the 10% margin on short sales imposed last week. In respect of carry forward business, if the carry forward position at the end of a settlement in any exchange in any scrip exceeds three% of the total number of paid up shares, a margin of 10% will be levied for every increase of one% or part thereof on incremental basis, over and above the existing carry forward margin of 10%. This would be applicable for both sales and purchase transactions. Once thismargin is imposed by any one exchange, the other exchange will also follow the same from the start of the next settlement. This additional margins is payable by way of cash/FDR /bank guarantee only. SEBI said margin on concentrated position will be introduced beyond the existing threshold limit prescribed by each exchange for collecting margin in case of trading on cash basis. This margin will be calculated on the basis of net outstanding in each scrip, buy and sale side, at the end of each day. For the purpose of margin on concentrated positions, SEBI has determined three slabs concentration in any one security is more than 50% of a broker’s total outstanding position (buy or sell as the case may be), concentration in any two securities taken together is more than 65% and concentration in any three securities taken together is more than 80%. Both the additional margins are payable by way of cash, fixed deposit receipt or bank guarantee only, SEBI said. SEBI clarified that concentrationmargin will also be applicable to carry forward trades.