NSE Extends Deadline To Impose Penalty On Brokers For Non-Collection Of Margin

In a circular on Thursday, the National Stock Exchange (NSE) extended the deadline for the imposition of penalty on brokers for not collecting adequate margins from 1 September to 15 September 2020.

"It has been decided to not levy penalty for client margin short/non- collection and reporting in the Cash and Derivatives segments. This provision shall be applicable for a period of 15 days -- from September 1, 2020 to September 15, 2020 -- to facilitate a smooth transition for members to the new system," the circular said.

The circular has been issued in consultation with the SEBI.

The new framework of acceptance of securities as margin by way of pledge/re-pledge mechanism through the depository system from 1 September 2020, has resulted in system congestion due to a large number of client securities being pledged in TMs (trading members) /CMs (clearing members) /CCs (clearing corporations) systems, the circular said.

"This has restricted the ability of the members to comply with the requirements of collection of margins," the circular said.

The implementation of the margin pledge-repledge system, along with the penalty for non-collection of margin in the cash segment, has led to an unprecedented load on the system of the Depositories and Clearing Corporations, damaging the market infrastructure.