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TMI BlogComprehensive Review of Margin Trading FacilityX X X X Extracts X X X X X X X X Extracts X X X X ..... mework to enable greater participation. The suggestions received from market participants were examined and deliberated in the Secondary Market Advisory Committee ( SMAC ). Based on the deliberations, the revised framework for Margin Trading Facility are stated as under: Securities Eligible for Margin Trading 3. Equity Shares that are classified as 'Group I security' as per SEBI Master circular No. SEBI/HO/MRD/DP/CIR/P/2016/135 dated December 16, 2016, shall be eligible for margin trading facility. Margin Requirement 4. In order to avail margin trading facility, initial margin required shall be as under; Category of Stock Applicable margin Group I stocks avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock broker shall make necessary margin calls. 8. The exchange/stock broker, based on the risk assessment, shall have the discretion to impose/collect higher margin than the margin specified in para-4 above. Liquidation of Securities by the Stock Broker in Case of Default by the Client 9. The stock broker shall list out situations/conditions in which the securities may be liquidated and such situations/conditions shall be included in the Rights and Obligations Document . The broker shall liquidate the securities, if the client fails to meet the margin call to comply with the conditions as mentioned in this circular or specified in the Rights and Obligations Document specified by exchange. 10. However, the broker shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure of the broker towards the margin trading facility shall be within the self imposed prudential limits and shall not, in any case, exceed the borrowed funds and 50% of his net worth . 18. While providing the margin trading facility, the broker shall ensure that: a) exposure to any single client at any point of time shall not exceed 10% of the broker s maximum allowable exposure, as specified in para 17 above. b) exposure towards stocks purchased under margin trading facility and collateral kept in the form of stocks are well diversified. Stock brokers shall have appropriate Board approved policy in this regard. Disclosure Requirement 19. The stock broker shall disclose to the stock exchanges details on gross exposure t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandatory and binding on the Broker/Trading Member and the clients for executing trade in the Margin Trading framework. 23. The broker/exchange may modify the Rights and Obligations document only for stipulating any additional or more stringent conditions, provided that no such modification shall have the effect of diluting any of the conditions laid down in the circular or in the Rights and Obligations document. Maintenance of Records 24. The stock broker shall maintain separate client-wise ledgers for funds and securities of clients availing margin trading facility. 25. The stock broker shall maintain a separate record of details of the funds used and sources of funds for the purpose of margin trading. 26. The books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the same. 31. This circular shall supersede earlier circulars no SEBI/MRD/SE/SU/Cir-15/04 dated March19, 2004, SEBI/MRD/SE/SU/Cir-16/04 dated March 31, 2004 and MRD/DoP/SE/Cir-08/2005 dated March 04, 2005 on Margin Trading Facility. 32. The Stock Exchanges are advised to:- a. take necessary steps and put in place necessary systems for implementation of this circular. b. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision. c. bring the provisions of this circular to the notice of the member brokers of the stock exchange and also disseminate the circular on the website. 33. This circular is being issued in exercise of the powers conferred by Section 11 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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