BSE to levy additional exposure margin on derivatives

Securities shall be identified under this framework based on three months’ rolling data and reviewed on a monthly basis, the exchange operator added.

Indian stock exchange operator BSE on Tuesday said its unit Indian Clearing Corporation will impose an additional 15% exposure margin on securities under market wide position limit (MWPL).

The move comes as Indian benchmarks have hit fresh record highs this month, with increased retail participation in the derivatives segment.

The additional margin levy will be effective Jan. 1 and apply to derivatives in which the top 10 clients of brokerages account for more than 20% of MWPL.

MWPL is the maximum number of open futures and options contracts allowed by the exchange for a stock.

Exposure, or additional margin is charged above existing margins, and is collected to provide protection against a broker’s liability due to market volatility.

Nuvama Alternative and Quantitative Research had warned of an aggressive long position held by high net worth investors category in the December series.

For securities wherein additional surveillance margin is applicable, the higher of additional exposure margin or additional surveillance margin shall also be levied, BSE said in a statement.

Securities shall be identified under this framework based on three months’ rolling data and reviewed on a monthly basis, the exchange operator added.