Client Connect

The regulator of capital markets (SEBI), had issued a circular [link] on the 20th July 2021 whereby it had instructed the market intermediaries (Stock exchanges, clearing corporations, stock brokers, other intermediaries) to implement certain changes to ensure that clients interests are better protected. The implementation of this circular was done in phases and starting the 2nd of May many significant implications of this circular shall get implemented across the markets. These changes shall lead to very important alterations in a few aspects for stock broking. 

We are enlisting below the the important changes that shall happen for your PM Securities trading account partially from the beginning of the trading session of 29th Apr 2022 and rest from beginning of the trading session of 2nd May 2022:

1) Maximum available collateral shall be capped at 2x of fund balance  ( Effective 29th Apr 2022 start of trading session )

Currently, the collateral available to clients for utilisation as margins is based on value of shares pledged by clients + clients fund balances. However, starting the 29th Apr 2022 the total available collateral value (that can be used as margins for trading) shall be based on the below formula:

Formula: Total collateral limit provided to clients to be used as margins = Minimum of A or B

Where, A =  Clients clear fund balance + Value of shares pledged by clients (after haircut)

And B = 2 x Clients clear fund balance

For better understanding let's refer to the below table. 

* Fund balance is the cleared fund balance as on the trading day. 

We recommend clients to add funds to their trading accounts to the extent of at-least 50% of the value to the shares pledged by them before beginning of trading session on 29th Apr 2022 to ensure frictionless trading.

2) Discontinuation of credit for sale (CFS) ( Effective 29th Apr 2022 start of trading session )

Currently, if a client sell shares from his/her holdings the client immediately gets a limit in the trading systems to use 80% of the value of the sold shares as margins to do other trades. However, this shall be discontinued from the start of trading session of 29th Apr 2022. Clients will be able to utilise the proceeds from the sold shares one day after the day on which the settlement of the shares is done. 

Example: If the client sells shares worth Rs. 100 from their PM Securities demat holdings on Monday (T day), the trade shall clear on Wednesday (T+2 day) and the credit for the sold share shall become usable as margins on Thursday (T+3). 

3) Segment wise margins ( Effective 2nd May 2022 start of trading session )

Currently, funds and pledged shares are being used as a common pool of collateral for margins across Equity (Cash) & Derivatives segment. However, starting the 2nd of May 2022, funds and pledged securities will be separately allocated for both segments. It is to be noted that for the time being reallocation of funds / pledged securities from one segment to another will not be possible during the market hours due to systematic limitations that shall be improved by clearing corporations and exchanges in due course of time. On the 2nd of May 2022 we will dynamically allocate funds and securities for all clients, and no action shall be required from clients side. Margins available both funds and pledges securities collateral, shall be separately displayed in Market Pulse / Fast Trade. 

Above enlisted changes are being implemented based on regulatory framework requirements, and are adapted to ensure least amount of transaction friction as of the current regulatory framework. Implementation of the same is of paramount importance, and is subject to alteration in case any last minute changes are recommended by the stock exchanges, SEBI. We will keep you informed in such a case, if need be. 

Please note, that in the view of implementation of the above circular, fund additions / withdrawals (During trading hours) may be hampered due to systematic constraints during the transaction period. 

For raising any complaints / concerns raise a ticket