You need to understand the SEBI margining to reduce speculation in the market from a slightly different perspective. Will the new SEBI margin rules hit intraday trading in India? The recent restrictions imposed by SEBI on leverage in equity and F&O is likely to be a dampener for volumes on the intraday trading front. That is more in the short to medium term. But in the longer run, it may actually end up beneficial to the markets.

Let us understand how it will impact the role of broker and also the trading investors at large. In the last few days, SEBI put some restrictions with a view to curbing the rampant spread of speculative intraday trading. The first measure was to insist on full payment of margins for buying and selling of stocks. While buyers anyways had to pay full margins even in the past, the problem arose in selling. Now, even if a trader wanted to sell intraday, substantial margins would be applicable on the position. Else, the trader will be asked to make a pre pay-in of the shares to avoid paying the margin. But the bigger problem for traders arises on the intraday trading in derivatives (futures and options). The regulator has fixed the basic minimum margin at 12.5% for all positions in F&O. that would restrict the overall leverage in F&O to just about 8 times. Brokers will now have to collect VAR margins plus Exposure Margins even for intraday trades. Even if the trade is clearly an intraday trade, these margins would apply. Currently, brokers offer lower margins for cover trades and bracket trades. Now even that will go. In short, the scope for leverage is being substantially reduced and that is likely to have a bearing on F&O volumes.