Updated December 19th, 2023 at 21:40 IST

BSE to impose extra exposure margin on derivatives

The decision comes as benchmarks have reached new all-time highs this month.

Reported by: Business Desk
BSE | Image:Shutterstock
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The stock exchange operator BSE has announced that its subsidiary, Indian Clearing Corporation, will levy an additional 15 per cent exposure margin on equities subject to the market-wide position limit (MWPL).
The decision comes as Indian benchmarks have reached new all-time highs this month, thanks to growing retail involvement in the futures market.

The increased margin fee will take effect on January 1 and will apply to derivatives in which the top 10 brokerage clients account for more than 20 per cent of MWPL.
The maximum number of open futures and options contracts for a stock allowed by the exchange is MWPL. Exposure, or additional margin, is levied in addition to existing margins and is collected to safeguard a broker from responsibility due to market volatility.

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In the December series, Nuvama Alternative and Quantitative Research warned of an aggressive long position held by high-net-worth investors.
The higher of the additional exposure margin or additional surveillance margin shall be imposed for securities where additional surveillance margin is applicable, according to a statement issued by the BSE.
This system will identify securities based on three months of rolling data and will be reviewed regularly, according to the exchange operator.

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Published December 19th, 2023 at 21:40 IST