Sebi introduces margin waiver for clients after Early Pay In of shares

The Securities and Exchange Board of India (Sebi) has introduced a framework under which Clearing Corporations will not collect margin from Trading Members or Clearing Members for clients' subsequent buy or sell positions in the equity cash segment, up to the value of accepted Early Pay-In (EPI) of securities, subject to certain conditions.

In a circular dated October 22, 2026, the market regulator said the facility would apply when a client has a net sell obligation in a settlement and the Clearing Corporation has successfully accepted the EPI request for the securities sold.

Under the new framework, the Clearing Corporation will calculate the available EPI value on the trading day. This will be the lower of the value of EPI completed and the value of securities sold.

When a client takes another position in the cash segment on the same trading day, the Clearing Corporation will assess the client's margin availability after reducing the available EPI value.

What happens if a client squares off a position?

If a client squares off the sale position for which the EPI benefit was used, the EPI value will be removed. Any resulting margin shortfall will be blocked from the proprietary collateral of the Trading Member or Clearing Member by the Clearing Corporation.

This condition will not apply to trade-for-trade (TFT) securities, as these transactions are settled on a gross basis.

Sebi has directed Trading Members to ensure that clients square off positions or take new positions only if the required client margins are available.

When will the new rules take effect?

The circular will come into effect four months after its issuance on October 22, 2026, making February 22, 2027, the effective date.

The regulator has also directed Clearing Corporations to make the necessary changes to their rules and systems to implement the framework.