Indian regulator proposes new risk curbs, wider funding option as margin trading surges
- SEBI has proposed clearer caps on broker exposure based on net worth
India's markets regulator proposes new measures for margin trading facilities (MTF) to enhance risk management and broaden funding options amidst significant growth in MTF volumes.
- Broadening funding and collateral flexibility for MTF.
- New broker exposure caps and client fund safeguards.
- Review of eligible securities for margin trading.
India’s markets regulator on Thursday proposed new measures to better manage risks and broaden funding avenues, as margin trading facility (MTF) volumes show an increase.
Here are the details:
The Securities and Exchange Board of India proposed to broaden funding and collateral flexibility for MTF by allowing traders to raise funds via non-convertible debentures, and expand eligible collateral, in alignment with the broader cash market
India’s MTF book has grown sharply in recent years, with outstanding positions reaching about 1.3 trillion rupees ($13.78 billion) by mid-2026, around 50% higher than a year ago, according to exchange data
SEBI has proposed clearer caps on broker exposure based on net worth, along with safeguards to protect client funds. It also suggested that any passive breaches at the client level should be resolved within 30 days
Currently, MTF is allowed only for select stocks and equity ETFs. SEBI is reviewing securities that can be used for margin, collateral, MTF and Securities Lending and Borrowing Mechanism (SLBM), and will issue a separate discussion paper on this.
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