Peak Margins

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The regulator , in a bid to control intraday or speculative leverage in the market, introduced a transition starting December 2020 wherein clients can only utiliise a certain percentage of their available margin to trade in markets. Earlier, the broker could fund many times this margin and this is what the regulators want to control.

The transition , that ends with 100% margin required for any trades by September 2021 (75% between June and August 2021), essentially implies that clients cannot use any leverage from the broker (Products known as MIS and Intraday) post September 2021.

Since brokers systems and exchanges cannot monitor trades similarly, the clearing corporation takes 4 random snapshots of margin utilised by each client at that moment – to essentially guess what margin was utilised by the client and whether it exceeded available margins. The highest of these 4 snapshot values is called the Peak Margin.

At the days end, the brokers are to compare the available margin with the higher of a) Peak Margin and b) End of day Margin and if available margin is less than this calculation, a penalty is levied on the shortfall.

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