In an attempt to provide a level-playing field for retail investors and improve trading volumes on the stock exchanges, the Securities and Exchange Board of India (Sebi) on Tuesday extended the facility of cross margining across the cash and derivative segments for all categories of market participants.
The market regulator said that positions in cash and F&O would be available for cross margining to the extent they offset each other. It implies that an investor need not pay the margin twice, if he buys a stock after holding an offsetting short position in the futures segments. The extreme loss margin and the mark-to-market margin, however, would be levied on the entire cash market position.
Earlier on May 5, the regulator had allowed institutional investors to avail this facility. For all other categories of investors, derivatives and cash market trades were treated as separate transactions.
Meanwhile, the Sebi indicated that only the index constituent stocks or stock futures would be eligible for cross margining. Stock futures and index futures with the same- month expiry would alone be eligible for the benefit. The benefit would not apply for stock futures positions that expire in the next three days. The Sebi has also imposed a spread margin of 25% of the total applicable margin on the eligible offsetting positions in the respective cash and derivative segments. Cross-margining benefit would be computed at client level on an online real time basis and provided to the trading member/clearing member/custodian, who would pass on the benefit to the client. For institutional investors, however, the cross-margining benefit shall be provided after the confirmation of trades.
Meanwhile, a client, in addition to his regular trading account, has to maintain a separate arbitrage account with his broker or clearing member. However, for the purpose of compliance and reporting requirements, the positions across both accounts shall be taken together and the clients shall continue to have a unique client code.
The move would help free up some much-needed working capital for broking firms besides improving the efficiency of the use of margin money by market participants. It could boost trading volumes undertaken by retail investors - high net worth individuals, traders, speculators and proprietary trades, due to the unlocking of margin money, which could be used as capital for fresh exposures.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.