TaxTMI 
TaxTMI 
Margin Trading and Securities Lending and Borrowing
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.... Group 1, Group 2 and Group 3. The securities having mean impact cost of less than or equal to 1 and having traded on atleast 80% (+/-5%) of the days for the previous eighteen months, have been categorized as Group 1. The securities in Group 1 would be eligible for margin trading facility. 1.3 Eligibility requirements for brokers to provide margin trading facility to clients 1.3.1 Only corporate brokers with a "net worth" of at least Rs. 3.00 crore would be eligible to offer margin trading facility to their clients. The "net worth" for the purpose of margin trading facility would mean "Capital" (excluding preference share capital) plus free reserves less non allowable assets, i.e fixed assets, pledged securities, member's card, non-allowable securities, bad deliveries, doubtful debts and advances (including debts and advances overdue for more than 3 months or given to associates), pre paid expenses, intangible assets and 30% of the marketable securities." 1.3.2 The broker shall submit to the stock exchange a half-yearly certificate, as on 31st March and 30th September of each year, from an auditor confirming the net worth as specified in clause 1.3.1. Such a certific....
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.... minimum amount, calculated as a percentage of the transaction value, to be placed by the client, with the broker, before the actual purchase. The broker may advance the balance amount to meet full settlement obligations. 2. "Maintenance margin" would mean the minimum amount, calculated as a percentage of the market value of the securities, calculated with respect to the last trading day's closing price, to be maintained by the client with the broker. 1.6.2 When the balance deposit in the client's margin account falls below the required maintenance margin, the broker shall promptly make margin calls. However, no further exposure can be granted to the client on the basis of any increase in the market value of the securities. 1.6.3 The exchange/broker shall have the discretion to increase the margins mentioned at 1.6.1 above and in such a case, the margin call shall be made, as and when required. 1.7 Liquidation of securities by the broker in case of default by the client 1.7.1 The broker may liquidate the securities if the client fails to meet the margin call made by the broker or fails to deposit the cheques on the day ....
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....e trading hours on the following day, through its website.. 1.9.3 The formats for such disclosures by the broker to the exchange and the exchange to the public are enclosed at Annexure 2 and 3 respectively. 1.9.4 The stock exchanges shall also put in place a suitable mechanism to capture and maintain all relevant details including member-wise, client-wise, scrip-wise information and source of funds of the members, pertaining to margin trading on their exchange, both on daily as well as on cumulative basis. 1.10 Arbitration 1.10.1The arbitration mechanism of the exchange would not be available for settlement of disputes, if any, between the client and broker, arising out of the margin trading facility. However, all transactions done on the exchange, whether normal or through margin trading facility, shall be covered under the arbitration mechanism of the exchange. 1.11 Investor Protection Fund and Trade/Settlement Guarantee Fund 1.11.1 The amounts lying in the aforesaid funds would not be available for settling any loss suffered in connection with the margin trading facility. However, the aforesaid funds will continue to be available for all transactions done on th....
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....ndling settlement shortages. 2. The clearing corporation/house may borrow, on behalf of the members, securities for the purpose of meeting shortfalls, if any, in the settlement, subject to the following : Borrowing by Clearing Corporation/Clearing House 1. The Clearing Corporation/House shall borrow the required securities to meet the shortfall on the day of settlement, for a maximum period of 7 trading days, excluding the day of borrowing. 2. The defaulter selling broker may make the delivery within 3 trading days from the due date, i.e. the settlement date, subject to charges for late delivery as may be prescribed by the stock exchanges. 3. In the event of the defaulted selling broker failing to make the delivery within the aforesaid 3 trading days, the Clearing Corporation/House shall buy the securities from the open market and return the same to the lender within 7 trading days. 4. The cost, if any, incurred by the clearing corporation/house in thi....