How are new SEBI margin rules impacting traders
How are new SEBI margin rules impacting traders In February 2020, The Securitiesand Exchange Board of India (Sebi) came up with new margin pledge rules, that came effective from September 1st, 2020. With the intent of bringing transparency and stopping brokers from misusing client’s money, the new norms are making the lives of investors as well as brokers more painful. But what do they hold for traders? Read along. Decrease in volume Margin trading basically gives traders, the power to buy more stocks than they can afford, by just paying a part of the share. This can be understood by taking the broker as the moneylender and securities as collateral. With the new norms, brokers are compelled to collect a 20% margin upfront for any buying or selling of shares, hence, traders will be able to buy as many stocks as they can afford, resulting in lower purchase volume. Intraday profits Earlier traders used their intraday profits to create new positions, but with new norms, traders w