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SEBI relaxes margin hike on non-F&O & F&O stocks: Experts discuss

In March this year, SEBI had lowered the ban threshold on market wide limits for F&O stocks and also upped the margins for exposure to such stocks in the cash market to curb volatility. It had also imposed higher margins on volatile non-F&O stocks. Both these measures have been rolled back now. What does this spell for the market and for traders?

In March this year, SEBI had lowered the ban threshold on market wide limits for F&O stocks and also upped the margins for exposure to such stocks in the cash market to curb volatility. It had also imposed higher margins on volatile non-F&O stocks.
Both these measures have been rolled back now. What does this spell for the market and for traders?
Nithin Kamath, founder and CEO of Zerodha and Sandeep Parekh, founder of Finsec Law Advisors spoke to CNBC-TV18 on this.
Kamath said, “Around 800-850 stocks kind of qualified in that higher margin requirement where exchanges were charging 40 percent as margin so these 850 stocks potentially can get more liquidity because of this.”
Sandeep Parekh said, “The whole idea was to protect the system. System requires protection because it is the institution with the huge concentration of risk and when you have outside volatility and you start collecting margins as businesses usual you put in in the system to risk. So the March circular would acknowledge the fact of this volatility and therefore they said we need to collect more margins, we need to restrict certain open positions. Now they don’t see that volatility, it is under control now so they have lifted the restriction.”
Watch this video for more.