SEBI eases margin rules for early share delivery; EPI value to be calculated on trade day

The Securities and Exchange Board of India (SEBI) on Thursday amended Early Pay-In (EPI) rules to ease margin requirements for stockbrokers and investors, allowing the value of shares delivered early to be recognised towards margin obligations.

The revised framework will come into effect on February 22, 2027, giving brokers and clearing corporations four months to upgrade their systems.

What is EPI?

Early Pay-In allows investors selling shares to transfer them to the clearing corporation before the scheduled settlement date. The value of securities delivered early can be used to meet margin requirements for the corresponding sale, reducing the need to provide additional funds.

What changes?

Under the revised rules, clearing corporations will calculate the accepted EPI value on the trade date. This value will be the lower of the value of securities delivered early and the value of securities sold.

For investors taking buy and sell positions in the cash market on the same day, clearing corporations will calculate margin requirements after deducting the accepted EPI value. Brokers will not have to collect additional margin for these positions to the extent covered by the accepted EPI value.

However, if an investor cancels or squares off a sale position against which EPI benefits have been extended, those benefits will be withdrawn. If this results in a margin shortfall, the clearing corporation will temporarily block the shortfall amount from the broker’s collateral.

SEBI has directed brokers to strengthen their risk-management systems to ensure clients can close EPI-linked positions or initiate trades only when sufficient margin is available.

Clearing corporations and brokers have also been asked to update their systems, operational rules and client-facing websites before the revised framework takes effect.