SEBI New Margin Trading Rules Explanation

As per SEBI’s directive in curricular no. CIR/HO/MIRSD/DOP/CIR/P/2019/139 and CIR/HO/MIRSD/DOP/CIR/P/2020/28, New Margin Trading Rules will come into effect from 01 Aug for Cash Market Trading.

Buy Today – Sell Tomorrow (BTST) will have a major impact because of this change. 

Below are the changes as per SEBI New Margin Trading Rules

1) Any equity shares that you have bought on a particular trading day, will not show under your holdings until after T+2 days.

For example: Shares bought on 03th August 2020, Monday, will not show under your holdings until 5th August 2020, Wednesday.

If you have Bought on Friday on any given day it will not show under your holdings until Tuesday(Saturdays and Sundays are not trading days and hence don’t count). 

2) Funds from all sell transactions from your holdings will be available for use only on the T+2 day. What this means 

• If you sell a stock today, you’ll get the money two days later (T+2) ie.In case Ram Sell Reliance Shares  from His holdings on 03th August 2020, Monday, the funds that Ram will receive from this transaction will be available for use only on and after 5th August 2020, Wednesday.
• If Shyam Sell Infosys from His holdings on Friday the funds that Shyam will receive from this transaction will be available for use only on and after Tuesday (Saturdays and Sundays are not trading days and hence don’t count). 

• If you want to buy a stock today itself, you won’t have that money (since it’s coming on T+2)

Suppoose Ram Sell Reliance Worth  1 Lakh Rs and Immeditaley wants to Buy Infosys he will not be able to Buy as Money will come after T+2 Days. Till Now he could have bought on the same day.If he still want to Nuy Infosys worth 1 lakh on the same he need to put in additional capital to purchase shares of infosys. If supposr you have purchased and unable to pay the money by end of the day there’s a short margin penalty. 

3) Exchanges will (from August 1) demand margins on a per-client basis. This means if you’ve bought shares, the broker will collect margin from you. Previously Brokers used to give margin from Pooled account but after KARVY Broking Scam  where Investors Lsot around 2800 cr, Exchange want to colelct margin on a per-client basis.

Impact of SEBI New Margin Trading Rules

1. Buy Today Sell Tommrow (BTST) will be affected if you trade with limited capital.
2. Traders will not be able to park money in LiquidBEES as money will come after 2 days.
3. Many Traders who used to Sell shares for paying additional margin when F&O positons goes agaisnt them will not be able to do that as Money will come after 2 days so they either need to sqaure off or bring in additional money.
4. Lot of Speculative activity has started in Market once lockdown was imposed this step will bring down speculative acitivity.

Note: The Securities and Exchange Board of India (SEBI) on Wednesday said new rules designed to reduce risks in margin trading will roll out on August 1 as planned, but the old system will run in parallel till August-end.