December 1, 2020

Volumes in F&O segment to shrink as peak margin rules kick in today

Volumes in the futures and options (F&O) segment are expected to shrink by a third in the coming months as the new peak margin norms come into effect from Tuesday. The F&O segment contributes about 90 per cent to the overall market volumes, nearly half of which is intra-day and heavily reliant on excess leverage.

The maximum intra-day leverage that can be offered by a broker will now be restricted and will keep reducing until September 1, 2021. After this, a broker can provide maximum leverage that is equal to SPAN+exposure for the F&O segment and VaR+ELM (minimum 20 per cent) for the cash segment.


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