SEBI has issued a new circular amending the Master Circular for Stock Brokers dated August 9, 2024, to align the timelines for collection of margins (other than upfront margins) with the T+1 settlement cycle in the cash segment.
Previously, Trading Members (TMs) and Clearing Members (CMs) had until T+2 days to collect margins from their clients. However, following the market-wide transition to a T+1 settlement cycle across all scrips and based on representations from the Brokersโ Industry Standards Forum (ISF), SEBI has now mandated that margins (except VaR margins and ELM) must be collected by the settlement day itself to ensure a robust risk management framework.
Accordingly, SEBI has modified the Master Circular:
Para 39.1.2: TMs/CMs must mandatorily collect upfront VaR margins and ELM before trade execution. Other margins must be collected by the settlement day. (The flexibility till settlement day is only for penalty purposes and should not be misconstrued as extended time for clients to pay margins.)
Para 39.1.3: If pay-in of funds and securities is completed by settlement day, it will be deemed that the other margins have been collected, and no penalty will be imposed.
Para 39.1.5: If clients fail to complete the pay-in by the settlement day and TMs/CMs have not collected the required margins, penalties for short or non-collection will be applicable.
A copy of the circular is enclosed.
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