SEBI eases margin burden on clients using early pay-in facility in cash segment

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Market regulator Securities and Exchange Board of India (SEBI) has allowed clients to use the value of shares they have already delivered to meet margin requirements for their other trades. The move is aimed at reducing the need for additional margin money when clients take fresh positions in the cash market.

This will reduce the need to provide additional margin for such trades, freeing up funds and improving the use of available capital, subject to the value of shares accepted under the Early Pay-In (EPI) facility. Early Pay-In means a trader delivers shares before the normal settlement date.

Under the new rules, clearing corporations will not collect additional margin from brokers for a client's subsequent buy or sell positions, up to the value of shares accepted under the Early Pay-In (EPI) facility.

SEBI circular issued on Thurday said, "it is decided that where a client has a net sell obligation in a settlement; and the EPI request for the sold securities has been successfully accepted by the CC, the CC shall, on a real-time basis, not collect margin from the Trading Member (TM)/ Clearing Member (CM) on the subsequent buy/sell positions of the client, up to the amount of such accepted EPI".

The benefit will be available when a client has shares to deliver after a sale and the clearing corporation has accepted the EPI request. The value considered for this benefit will be the lower of the value of shares delivered early and the value of shares sold.

However, if a client buys back shares sold under the EPI facility, the value of the early-delivered shares will no longer be counted towards the margin. If this leads to a shortage of margin, the clearing corporation can block the broker's own collateral to cover the shortfall.

This condition will not apply to Trade for Trade securities, which are settled on a gross basis.

SEBI has also directed brokers to ensure that clients can close their existing positions or take new positions only when the required margin is available.

The new framework will come into effect four months from October 22, 2026, the date of the circular i.e. February 22, 2027.

The decision follows proposals from the Brokers' Industry Standards Forum and recommendations from SEBI's Risk Management Review Committee.

Brokers have been seeking this relief for a long time, and the regulator has finally approved the proposal and issued a circular.