Peak margin rule to become effective from today. Details here

Speaking on the peak margin rule and its impact on jobers, intraday traders and broking business; Avinash Gorakshkar, Head of Research at Profitmart Securities said, “Market participants earn arbitrage through exchanges, which will be difficult after the implementation of 100 per cent upfront margin payment system.” He went on to add that in the wake of 100 per cent upfront margin money payment norms for intraday traders, slide in volume can be expected for some time.

Hailing the move to implement peak margin rules; Saurabh Jain, AVP — Research at SMC Global Securities said, “Those brokers, traders and jobbers who have a better track record, they are mentally prepared and hence this new norm is not going to impact them much because first three leg of this rule has already in operation as first leg of this peak margin rule was implemented in December 2020 with 25 per cent upfront margin money payment rule. Later on it was increased to 50 per cent and 75 per cent in next two legs of this peak margin rule. So, traders and brokers were well aware about what’s writing on the wall.”

On whether 100 per cent upfront margin money payment rule working as catalyst for illegal trade (dabba trading) as some jobber may trade in brokers’ account using stop loss to the extent of money they had paid to their broker; Avinash Gorakshkar of Profitmart Securities said, “Very difficult to confirm this as regulations have become more stringent. So, dabba trading is unlikely to increase. But, yes! This will make intraday trading more difficult for traders ahead.” He said that rise in impact cost and decrease in liquidity can’t be denied but traders and jobers need to adjust with the new norm, as the peak margin rule aims to decrease their risk related to default.