What is the new 20% Stock Market Margin?

The Securities and Exchange Board of India building. (Photo: Mint)

Securities and Exchange Board of India (SEBI) introduced a new 20 % upfront margin on cash market transactions. It was done to tighten pledging system and protect the interests of the investors.

It is to be paid on the same day, and the subsequent 80% next day.

20% upfront cost will be applicable on buying and selling of shares and securities. Earlier it was only required in Future and Options segment.

Securities and Exchange Board of India (SEBI) – ReviewStories

Investors lost millions in the recent Karvy scam. Actually the unauthorized pooling system, use of POA (Power of Attorney) by brokers.

They used to take out money from clients' accounts and used it for another clients' requirements.

The 20 percent cost will make Stock Markets to perform smoothly.

The pledging system will make investors money more safer. This will lead to transparency and extra layer of security.

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