SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021

SMDRP/POLICY/CIR-35 /98
December 11, 1998

To

The Presidents/Executive Directors/ Managing Directors
of the Exchanges,

Dear Sir,

Sub: Margins Disclosures

On November 26, 1998, SEBI discussed issues relating to disclosures and margins with the stock exchanges namely, The Stock Exchange, Mumbai, National Stock Exchange, The Calcutta Stock Exchange and Delhi Stock Exchange. Besides consultations were also held with other exchanges which form part of the Inter-Exchange Co-ordination Group and Inter Exchange Market Surveillance Group. After discussion and consultation with the exchanges, it was decided by SEBI that :

Member-brokers would disclose to the stock exchanges on a daily basis the gross outstanding position at the clients’ level (i.e. without netting-off of purchases of one client with the sales of the other client of the same stock). To clarify further, it may be noted that, for the purpose of such disclosures, inter client netting-off of outstanding position on the same stock would not be permitted.

The existing threshold limit followed by the exchanges for purpose of levying margins would be reduced to Rs. One crore for the purposes Gross Exposure and Rs.50 lakhs for Net Exposure. There would not be any change for exchanges where these limits are already less than the limits mentioned above i.e. Rs. One crores and Rs.50 lakhs respectively.

It shall be mandatory for member-brokers to collect margins from clients in all cases where the margin in respect of the client in the settlement, would work out to be more than Rs.50,000/-. The margin so collected shall be kept separately in the client bank account and utilised for making payment to the clearing house for margin and settlement with respect to that client.
The Exchanges are advised to implement the decisions mentioned above from the first settlement following the receipt of this circular.

Yours faithfully
P K Bindlish
Division Chief
Secondary Market, Depository
Research & Publications Department
E-mail :pkb@sebi.gov.in

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