Archive · 23 Jul 2026
SEBI Considers Risk-Based Margin Framework for Cash Market
SEBI is thinking about changing how much money investors need to put upfront when they buy stocks.
Right now, they have to pay 20% of the stock's value, but SEBI wants to make it so that the amount depends on how risky the stock is.
This could mean investors pay less for safer stocks, which might make more people want to invest.
SEBI is also looking at how stocks are grouped by how easy they are to sell, and they might make it harder for stocks to be in the most liquid group.
They're doing this to make the stock market work better and get more people involved.
SEBI proposes replacing the flat 20% upfront margin with a risk-based framework.
The new framework would require brokers to collect margins based on risk assessed by clearing corporations.
Investors would pay the lower of the risk-based margin or 20% of the trade value.
The risk-based framework could reduce upfront margin collected by 10-15% for highly liquid stocks.
SEBI is also considering changes to stock classification based on liquidity.
- Who
- Securities and Exchange Board of India (SEBI)
- What
- Proposal to replace flat 20% margin requirement with risk-based framework
- When
- Consultation paper expected shortly
- Where
- India
- Why
- To improve liquidity and encourage greater participation in the equity cash segment
Market Participants
Regulatory Caution
Margin Requirements
Market Participants
Market participants argue that the current 20% flat margin requirement is excessive for low-risk trades and blocks unnecessary investor funds.
Regulatory Caution
Regulators may have concerns about ensuring adequate risk coverage and preventing potential market instability.
- Current Margin Requirement
- 20% of trade value
- Proposed Margin Framework
- Risk-based margin determined by clearing corporations
- Expected Reduction in Margin
- 10-15% for highly liquid stocks
- VaR and ELM
- Risk-based margins calculated by clearing corporations
- Consultation Paper
- Expected to be released shortly