July 27, 2000


The President/Executive Director/ Managing Director of all the Stock Exchanges

Dear Sir,

Modified Carry Forward System (MCFS)

Based on the recommendations of the Risk Management Group constituted by SEBI the following decisions have been taken :

Incremental Carry Forward Margin (ICFM)

The Incremental Carry Forward Margin as prescribed by SEBI vide its Circular 19 dated July 2, 1999 will now be charged as a combination of slabs based on percentage (of total number of shares paid up) and absolute outstanding market-wide carry forward position in a scrip.

Accordingly, in case the carry forward gross position in any exchange, in any scrip, exceeds the parameters mentioned below, the ICFM shall be levied, in addition to the carry forward margin, at a rate which is higher of the rates determined as per the tables below :

Gross Outstanding Market Position (Rs. In crores) Rate of Margin Carry Forward Gross Position (in number of shares as % of total number of shares paid-up) Rate of Margin
Exceeding 75 and up to 100 5% Exceeding 3% going upto 4% 5%
Exceeding 100 and up to 150 8% Exceeding 4% going upto 5% 8%
Exceeding 150 and up to 200 12% Exceeding 5% going upto 6% 12%
Exceeding 200 and up to 300 17% Exceeding 6% going upto 7% 17%
Exceeding 300 and up to 400 23% Exceeding 7% going upto 8% 23%
Exceeding 400 30% Exceeding 8% 30%

Once this margin is imposed by any Exchange having ALBM or MCFS facility, the other Exchanges having ALBM or MCFS will also follow the same from the start of next settlement.

Mark to Market Margin (MTM)

Mark to Market Margin shall be collected separately from daily/exposure margin as the purpose of these margins is different.

Collection of Margins

The Carry Forward Margin in respect of positions carried forward would be paid 100% in cash or fixed deposits or government securities, or a combination of three.

The Stock Exchanges are advised to implement these decisions immediately.

Yours faithfully,




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