pc
nid 93368
Jun 19, 2026
pthandapani@vixio.com
India
Securities and Exchange Board of India
financial services
88% of draft length
draft in Generated
Generated
1783 charsSecurities and Exchange Board of India Launches Consultation on Margin Trading Facility Framework Review
On June 18, 2026, the Securities and Exchange Board of India (SEBI) launched a consultation on the review of the Margin Trading Facility (MTF) framework. The MTF allows investors to trade securities using borrowed funds, amplifying both potential gains and losses. SEBI's consultation seeks to gather stakeholder feedback on potential modifications to the existing MTF regulations that govern how brokers and market participants facilitate margin-based trading in Indian securities markets.
The consultation addresses the regulatory framework governing margin trading practices, including borrowing limits, risk management procedures, and investor protection mechanisms. SEBI is reviewing the MTF framework to ensure it remains aligned with current market conditions, technological developments, and international best practices while maintaining appropriate safeguards for retail investors. The review considers how margin trading practices have evolved since the framework's last significant update and whether existing regulations adequately address emerging risks in leveraged trading activities.
The consultation is relevant to brokers, investment firms, market participants engaged in margin trading, and retail investors utilising MTF services. SEBI's review aims to balance market efficiency with investor protection, particularly given the risks associated with leveraged trading instruments.
Stakeholders can submit their comments and feedback through SEBI's public comments portal. The specific comment deadline has not been provided in the available source material. Responses will inform SEBI's development of any revised MTF guidelines or regulatory amendments.
REFERENCES:
https://www.sebi.gov.in/sebiweb/publiccommentv2/PublicCommentAction.do?doPublicComments=yes
Agent draft
Not run yet.
Published
1570 charsSecurities and Exchange Board of India Launches Consultation on Margin Trading Facility Framework Review
The Securities and Exchange Board of India (SEBI) has issued a consultation paper on the review of the margin trading facility (MTF) framework.
The consultation paper contains:
New provisions proposing a uniform list of eligible collaterals for both cash and MTF transactions, allowing EPI sell credits as collateral, and granting a 30-day rebalancing period if a security moves out of the Group I or Trade-for-Trade categories.
Regulations expanding the permitted sources of funds for MTF to include non-convertible debentures (NCDs) and other debt instruments, while increasing the minimum net worth eligibility for stock brokers from INR30m (US$317,800) to INR50m (US$529,650) and allowing limited liability partnerships (LLPs) to offer these services.
Provisions outlining that a broker's maximum MTF exposure can reach up to 5.5 times their remaining net worth after ring-fencing a specified amount, and clarifying that passive breaches of the 10 percent single-client limit will not be treated as violations if corrected within 30 days.
Administrative measures mandating all stock exchanges to jointly prepare a uniform rights and obligations (R&O) document within 30 days to ensure clarity for brokers and clients.
Directives permitting the fungibility of unencumbered funds or securities between a client's normal ledger and MTF ledger, while maintaining the higher maintenance margin requirement of value at risk (VaR) plus 5 times the extreme loss margin (ELM) when cash margin is used as pay-in.
Feedback may be submitted via this link by July 9, 2026.