Market regulator SEBI allows cross-margining facilities to offset positions in co-related equity indices

Mumbai, Ta. November 09, 2019, Saturday

To facilitate the effective use of collateral by market participants, the capital markets regulator Sebi has decided to allow cross-margining facility to offset positions in high-correlated equity indices. In Year 1, SEBI allowed cross marginalization in cash and exchange traded equity derivatives segments.

Such benefits will be provided on off-setting positions on equity indices. Which will require compliance with certain conditions. Between the values ​​of equity indices, a positive correlation of over 6 months will be required for a period of six months and the other index will have to be 5% of the constants of any one index.

While the constitution of the small index on the basis of free float market capitalization, the large index on the basis of free float market capitalization should have a weightage of 5%.

These criteria will be Eligibility-wise they will be required to check the cross marginal benefit perpetuity on a monthly basis on the 1st of every month and on the day of change in the constitution of equity indices by the clearing corporation.

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