The Securities and Exchange Board of India (SEBI) has announced a significant change to market regulations, implementing a new framework that will exempt Clearing Corporations from collecting margins for certain client positions. This waiver applies when clients have a net sell obligation in a settlement and their Early Pay-In (EPI) request for the sold securities has been successfully accepted by the Clearing Corporation.
Issued in a circular dated October 22, 2026, the new facility is designed to enhance flexibility for traders in the equity cash segment. It will allow clients to take subsequent buy or sell positions up to the value of their accepted EPI without facing additional margin calls from Trading Members or Clearing Members, subject to specific conditions.
How the New Framework Operates
Under the revised guidelines, Clearing Corporations will calculate the available EPI value on the trading day. This value will be the lower of the total EPI completed and the value of the securities sold. When a client subsequently enters another position in the cash segment on the same trading day, the Clearing Corporation will assess the client's margin availability after deducting this calculated EPI value.
Conditions and Exceptions
An important condition of the framework is related to squaring off positions. If a client squares off a sale position for which the EPI benefit was utilized, the corresponding EPI value will be removed. Any resulting margin shortfall will then be blocked from the proprietary collateral of the respective Trading Member or Clearing Member by the Clearing Corporation.
However, this condition does not apply to trade-for-trade (TFT) securities, as these transactions are settled on a gross basis, operating under different settlement mechanisms.
Implementation Timeline and Directives
The circular specifies that these new rules will come into effect four months after their issuance. Therefore, the effective date for the SEBI margin waiver framework is set for February 22, 2027. SEBI has directed all Clearing Corporations to make the necessary amendments to their rules and systems to ensure a smooth and timely implementation of this new framework.
Additionally, Trading Members are mandated to ensure that clients only square off positions or take new positions if the required client margins are readily available, maintaining market integrity and compliance.