SEBI waives margin on new cash trades up to value of accepted early pay-in
Key points
- Clearing corporations must not collect margin on a client's subsequent buy or sell positions, up to the value of accepted early pay-in.
- The circular applies to stock exchanges, clearing corporations, depositories and stock brokers, and benefits clients who sell shares and pay in early.
- The framework comes into force four months from 22 October 2026, the date the circular was issued.
The Securities and Exchange Board of India (SEBI) has told clearing corporations (CCs) to stop collecting margin, in real time, on a client’s subsequent buy or sell positions in the cash segment up to the value of early pay-in (EPI) of securities the client has already sold. The circular, No. HO/(320)2026-MRD-POD2/I/24141/2026 dated 22 October 2026, comes into force four months from the date of issue.
What has changed
SEBI notes that existing exchange and CC guidelines already treat accepted EPI through the block mechanism as margin collected towards peak margin for that sale, and allow the sale value of up to 100% of such securities to be used as margin for other positions across segments once the sale value is credited to the client’s ledger.
Taking into account proposals from the Broker ISF, recommendations of SEBI’s Risk Management Review Committee (RMRC) and internal deliberations, SEBI has now decided that where a client has a net sell obligation in a settlement and the EPI request for the sold securities has been accepted by the CC, the CC shall not collect margin from the trading member (TM) or clearing member (CM) on the client’s subsequent buy or sell positions, up to the amount of the accepted EPI. The circular sets out how this will work:
- Available EPI value: once EPI is accepted, the CC computes the available value on the trade date as the lower of the value of EPI done and the value of securities sold.
- Same-day positions: when the client takes a position in the cash segment on the same trade date based on the EPI, the CC checks the client’s margin availability after reducing the available EPI value.
- Square-off of the sale: if the client squares off the sale position for which EPI benefit was used, the EPI value is removed, and any resulting shortfall in client margin is blocked from the proprietary collateral of the TM/CM. This does not apply to trade-for-trade (TFT) securities, which settle on a gross basis.
TMs must ensure their risk management lets a client square off the EPI position or take a new position only if the client’s requisite margins are available with the TM. CCs must amend their bye-laws, rules and regulations, make any system changes needed, and publish the circular on their websites.
Who is affected
The circular is addressed to all recognised stock exchanges, clearing corporations, depositories and stock brokers. In practice, the benefit reaches clients who sell shares in the cash segment and complete early pay-in of those shares.
What this means for businesses
This mainly matters to brokers and clearing members, who will need to update their risk systems. In practice, a client who sells shares and pays them in early should be able to use that value to take fresh cash-segment positions on the same day without the broker having to collect separate margin for them, up to the EPI value. Brokers, however, take on the shortfall from their own collateral if a client reverses the sale, so they may tighten how they allow square-offs. The circular does not say how individual brokers will pass this on to clients; anyone relying on it should check with their broker once systems are updated.
Key dates
- 22 October 2026: circular issued.
- Four months from 22 October 2026: provisions come into force.
This update was written with AI from the official source above and automatically fact-checked against it before publishing. It is general information, not professional advice. Check the source, or talk to a Chartered Accountant, before acting on it.