InvestorQ : What are the implications of the new upfront VAR margining system in cash trades?
Arti Chavan made post

What are the implications of the new upfront VAR margining system in cash trades?

Answer
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3 months ago


As per the new SEBI regulations, it now mandatory to collect upfront VAR (value at risk) margin in cash market trades too. In the past, it was ok to collect the margins by next day morning in case of delivery trades. But that may not be a major concern for the buy side. What is a bigger issue is that these margins will also apply to the sell side too. Of course, this can be resolved by giving power of attorney to the broker or by ensuring advance demat debit. In the absence of that, even sell transactions will now attract margins. Ledger debits will now attract much larger penalty.