Mumbai: The rules will change for general investors from September 1 in the stock market. Now they will not be able to take advantage of the margin from the broker. The amount of money they will give to the broker in the form of upfront margin, they will be able to buy shares only. Many stockbrokers are worried that the volume will come down. Let's understand what is this new rule of SEBI?
What is the margin taking process so far?
There are two types of margins. There is a cash margin in which the amount of money you have given to your broker, how much surplus is there, you can buy and sell in the market. The second is the stock margin. In this process, brokerage houses transfer stocks from your Demate account to their account and a pledge mark is made for the clearinghouse. In this system, if there is a loss in trading above the cash margin, the clearinghouse can recover the amount by selling the stock marked pledge.
What will be the new system?
SEBI has redefined margin trading. Till now the investor had less role in pledge system and more of a brokerage house. Brokers used to do many things on behalf of the investor. Stocks will remain in your account under the new system and at the same time, the clearinghouse will mark the pledge. This will prevent your stocks from entering your broker's account. It will be in your right to determine the margin. The pledge will be marked in favour of the broker. The broker will have to open a separate Demat account. 'TMCM-Client Security Margin Pledge Account'. TMCM here means Trading Member Clearing Member.
The broker must then pledge these securities back to the clearing corporation's favour. Then you will get an additional margin in your account. If there is a shortfall of less than one lakh rupees in the margin, then a penalty of 0.5 per cent will be imposed. Similarly, the penalty will be 1 per cent on the shortfall of more than one lakh. If the margin remains shortfall for three consecutive days or shortfall for five days in a month, then it will attract a 5 per cent penalty.
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