Latest Market News: Understanding
Praveen Dubey (SEBI Registered RA)
SP RESEARCHVIA PVT. LTD. (INH000015808)
How SEBI Peak Margin Guidelines Changed Intraday Leverage
To prevent brokers from offering excessive leverage that leads to retail client defaults, SEBI introduced the peak margin system. This framework has significantly altered intraday trading dynamics in India.
What is the Peak Margin Rule?
The Peak Margin Rule requires traders to deposit 100% of the minimum margin required (SPAN + Exposure) for intraday positions, based on random snapshots taken during the day by clearing corporations.
Impact on Retail Traders
The introduction of 100% peak margin has had several key effects:
- Lower Leverage: Brokers can no longer offer 20x or 40x leverage for intraday equity or derivatives positions.
- Volume Shift: A reduction in overall intraday volumes as capital requirements became stringent.
- Risk Mitigation: Protection for retail traders from sudden overnight gaps and massive margin calls.
Written by Praveen Dubey
Chief Research Analyst | SEBI Reg: INH000015808
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