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SEBI slaps additional 5% margin on top 10 scrips

The Securities and Exchange Board of India and representatives of five leading stock exchanges in their review meeting, have decided to impose additional five per cent margin on top ten scrips including Infosys Technologies to cool down the overheated stock markets.

The representatives of SEBI and leading stock exchanges met in Bombay today to take stock of the situation. They also agreed on various other measures to be taken for the safety of the markets.

The group felt that to bring the institutional trades under the purview of margins since a significant portion of outstanding position and market is on account of institutional trades.

The five leading exchanges identified ten scrips in terms of outstanding positions, volume and volatility on which the additional five per cent margins would be charged.

The scrips included Infosys Technologies, Satyam Computer Limited, Himachal Futuristic Communications, Silverline Technologies, NIIT, Zee Telefilms, Global Telesystems, Pentamedia Graphic, Digital Equipment and DSQ Software.

Besides, the 5 per cent additional margins on these volatile scrips, it was also decided that the cash component of additional capital and margin should be increased and standardised. The cash component should reach the level of 50 per cent by the end of March 2000.

The group has recommended that in a move to bring institutional trades under the purview of margins, the flat margins should be imposed against them. The modalities would be worked out after a meeting with the institutions within a week, the SEBI release said.

It may be recalled, the regulatory body has already directed the five major exchanges including the BSE, NSE, CSE, DSE and ASE to take incremental additional capital and margins from their top 25 brokers in the form of cash or FDRs only and further asked them to withdraw the existing facility of accepting additional capital or margins by way of bank guarantees or securities.

After the today's meeting, the SEBI asked the exchanges that they should ensure that brokers collect margins from clients wherever the margin liability for the client exceeds Rs 100,000. The exchanges have been asked to carry out inspections to verify that the brokers are abiding by this request.

Presently, the volatility margin captures six-weekly volatility. It was decided that the present system of volatility margin would be further refined and strengthened to capture short-term volatility. Modalities in this regard would also be decided within a week.

The SEBI has also told the stock exchanges to strengthen their surveillance and monitoring to detect market manipulations in a timely and proactive manner.

UNI

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