resr 5paisa Research Team 9th December 2022

100% Peak Margins Kick-In From 1st September 2021

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Effective Wednesday, the 1st September 2021, the fourth and final phase of the SEBI ordained peak margining system will kick in. When the peak margining system was introduced in September 2020, it had raised a furore with brokers and traders complaining that it would result in drying up of intraday volumes. To facilitate the adjustment to x`the change, SEBI implemented the peak margins in 4 phases as under.

The Updated Peak Margin Rules by SEBI


Effective from

% of Peak Margins

Phase 1

December 2020

25% of Peak Margins

Phase 2

March 2021

50% of Peak Margins

Phase 3

June 2021

75% of Peak Margins

Phase 4

September 2021

100% of Peak Margins

All About the New Rules for Peak Margin Implemented by SEBI

Peak Margins brought about 3 major changes. SEBI stipulates margins for all F&O and cash positions. If, for example, the margins for 1 lot of Reliance Futures is Rs.180,000, then effective 01-Sep, the entire amount has to be collected upfront. Secondly, margins will be also applicable on sale of demat shares, unless the trader marks advance pay-in. 

Lastly, the peak margins will be determined by taking 4 trade snapshots during the day and calculating the highest value as the peak margin. There will be stiff penalties for failure to meet this obligation by brokers. This effectively means that brokers funding the margins of clients intraday will no longer be possible under the peak margining system.

The objective of SEBI in the entire exercise of peak margin system was to reduce speculation in the market so that retail investors are not caught on the wrong foot in volatile markets. The protests, especially from bodies like ANMI, are that the volumes will dry up in the intraday market, but we are yet to see evidence of that. 

From the traders perspective, they must be prepared to pay up margins upfront for any position in the market. For the brokers, this surely reduces the risk of open positions since they would be covered by margins for peak risk.


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