Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021

20 April, 2000


The President/Executive Director/ Managing Director  Of All Stock Exchanges


The Risk Management Group met on April 06, 2000 to deliberate on issues of simplification and further rationalisation of the margining systems and also to consider the various other instruments of risk management. The following decisions were taken in the meeting:-

1. The surplus margin available with the stock exchanges in cash after adjustments for additional capital required by the broker for further exposure, will be refunded by the stock exchange to the broker on daily basis. This will be implemented by the stock exchanges as soon as possible and in any case not later than May 01, 2000.

2.It was again emphasised that the exchanges should immediately implement the existing provisions of the SEBI circular dated July 09, 1999, regarding rationalisation of the margins structure, where it was provided that the outstanding position to the extent of early pay-in of securities/funds would not be considered for computing of mark to market margin, volatility margin and exposure limits.

3.The sales position which crystallises at the end of the trading period will be considered exempt for the purpose of calculation of exposure limit and margins. The exchanges, however, at their discretion can effect such risk management measures as they deem fit in respect of such delivery positions in case of exceptional circumstances considering the volatility and liquidity and other parameters.

4.In order to ensure the efficiency of collection and the refund/remittance of the margins system, the clearing banks of the exchanges should have connectivity with the clearing house/ corporations.

The Exchanges are advised to take effective steps to implement the above decisions.

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