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TMI BlogMargin Trading and Securities Lending and BorrowingX X X X Extracts X X X X X X X X Extracts X X X X ..... ecurities having mean impact cost of less than or equal to 1 and having traded on atleast 80% (+/-5%) of the days for the previous eighteen months, have been categorized as Group 1. The securities in Group 1 would be eligible for margin trading facility. 1.3 Eligibility requirements for brokers to provide margin trading facility to clients 1.3.1 Only corporate brokers with a net worth of at least ₹ 3.00 crore would be eligible to offer margin trading facility to their clients. The net worth for the purpose of margin trading facility would mean Capital (excluding preference share capital) plus free reserves less non allowable assets, i.e fixed assets, pledged securities, member s card, non-allowable securities, bad deliveries, doubtful debts and advances (including debts and advances overdue for more than 3 months or given to associates), pre paid expenses, intangible assets and 30% of the marketable securities. 1.3.2 The broker shall submit to the stock exchange a half-yearly certificate, as on 31st March and 30th September of each year, from an auditor confirming the net worth as specified in clause 1.3.1. Such a certificate shall be submitted not later than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alculated as a percentage of the market value of the securities, calculated with respect to the last trading day s closing price, to be maintained by the client with the broker. 1.6.2 When the balance deposit in the client s margin account falls below the required maintenance margin, the broker shall promptly make margin calls. However, no further exposure can be granted to the client on the basis of any increase in the market value of the securities. 1.6.3 The exchange/broker shall have the discretion to increase the margins mentioned at 1.6.1 above and in such a case, the margin call shall be made, as and when required. 1.7 Liquidation of securities by the broker in case of default by the client 1.7.1 The broker may liquidate the securities if the client fails to meet the margin call made by the broker or fails to deposit the cheques on the day following the day on which the margin call has been made or where the cheque deposited by the client has been dishonoured. 1.7.2 The broker may also liquidate the securities in case the client s deposit in the margin account (after adjustment for mark to market losses) falls to 30% or less of the latest market value of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including member-wise, client-wise, scrip-wise information and source of funds of the members, pertaining to margin trading on their exchange, both on daily as well as on cumulative basis. 1.10 Arbitration 1.10.1The arbitration mechanism of the exchange would not be available for settlement of disputes, if any, between the client and broker, arising out of the margin trading facility. However, all transactions done on the exchange, whether normal or through margin trading facility, shall be covered under the arbitration mechanism of the exchange. 1.11 Investor Protection Fund and Trade/Settlement Guarantee Fund 1.11.1 The amounts lying in the aforesaid funds would not be available for settling any loss suffered in connection with the margin trading facility. However, the aforesaid funds will continue to be available for all transactions done on the exchange, whether normal or through margin trading facility. 1.12 General provisions 1.12.1The brokers wishing to extend the facility of margin trading to their clients would be required to obtain prior permission from the exchange/s where the margin trading facility is proposed to be provided. The exchange shall have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the day of borrowing. 2. The defaulter selling broker may make the delivery within 3 trading days from the due date, i.e. the settlement date, subject to charges for late delivery as may be prescribed by the stock exchanges. 3. In the event of the defaulted selling broker failing to make the delivery within the aforesaid 3 trading days, the Clearing Corporation/House shall buy the securities from the open market and return the same to the lender within 7 trading days. 4. The cost, if any, incurred by the clearing corporation/house in this regard shall be recovered from the defaulted selling broker. This would be in addition to other penal charges referred to at point (ii) above. 5. The return of the borrowed securities by the Clearing Corporation / House should be independent of the normal settlement. 2.3.3 In case of the inability of the clearing corporation/house to borrow the securities fully or partly for the purpose of meeting the shortfall in the settlement, the outstanding transaction shall be closed out, as described below : The Clearing Corporation/House shall effect close out of such remaining quantity and/or securities by pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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