Things to know about Peak Margin!
The Peak margin implementation has not been done in an overnight manner. It took years to bring in the new framework in phases.
Earlier, Brokers used to report margin details at end of the day for all the carry forward positions. In this scenario, brokers were able to give high leverages to the clients.
As per new guidelines, now brokers should report margin details multiple times during the day.
Phase – 1 (Dec 1, 2020, to Feb 2021) In this phase compulsory clients should have 25% of the peak margin with the broker.
Phase - 2 (March 1st, 2021 to May 2021) Here in this phase the required margin got increased to 50%.
Phase - 3 (June 1st, 2021 to Aug 2021) In this stage the margin requirement is 75% of the peak margin.
Final Phase - (Sep 1st, 2021)Client should maintain 100% of peak margin with the broker to trade.
How does the calculations?
For NSE cash segment the calculation based on VAR (Value at risk) + ELM(Extreme loss margin) OR 20% of trade value.
And for Derivatives (Futures & Option (Writing)) segment based on Span + Exposure margin.
Ref the circular here.
SEBI Circular:click here
MCX Circular:click here