Phase 4 of Peak Margins will be live from 1st September 2021
The fourth phase of Peak Margins as prescribed by SEBI here will be effective from 1st September 2021. This means in order to offer Intraday trading across various products brokers need to collect a minimum of 100% of funds on the prescribed limit from 1st September 2021.
What are Peak Margins?
Before 1st December 2020, brokers could provide higher leverages by offering products like Intraday (MIS), Cover Order (CO), and Bracket Order (OCO) as margins would only be applicable in case a position is carried forward.
However, in the interest of the market and to bring in more stability, SEBI mandated all brokers to collect minimum funds from customers even for the Intraday positions. This means traders can take Intraday positions only after fulfilling this minimum margin requirement. SEBI also asked clearing members and clearing corporations to monitor brokers’ margin activities from 1st December 2020.
The changes as per these guidelines are being rolled out in phases.
In the previous phase which was effective from 1st June 2021, brokers had to collect a minimum of 75% funds on the prescribed limit from customers. And now in the next phase which will be effective from 1st September 2021, brokers have to collect a minimum of 100% funds on the prescribed limit from customers.
You can read more about it here.
How does this affect intraday traders?
As per SEBI guidelines, brokers have to collect a minimum of 100% funds on the prescribed limit on Intraday trading offered across various products. Margin applicable on the intraday positions would be:
Equity: 100% on applicable VAR + ELM OR 20% of trade value
Futures and Option (writing): 100% on SPAN + Exposure margin
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