The National Stock Exchange (NSE) on September 11, 2024, issued a clarification on the Margin Trading Facility with reference to Exchange circular reference no. NSE/COMP/48531 dated June 09, 2021, regarding FAQs on Margin Trading Facility (MTF).
Based on representation from Brokers’ Industry Standards Forum and in consultation with SEBI, the term “exposure” as defined in Question 12 of Annexure A of the abovementioned circular has been modified and accordingly, the clarification provided in the aforesaid Question 12 stands revised as under:
Q12. What is the maximum allowable exposure of the Member towards MTF?
A. The maximum allowable exposure shall be within the self-imposed prudential limits and shall not, in any case, exceed the borrowed funds and 50% of his “net worth”. The term “exposure” shall mean the aggregate outstanding margin trading amount as reduced by cash collateral collected from the client, if any, and used for pay-in purposes for the same client in the MTF books of the trading member for all his clients at any given point of time. The term “borrowed funds” shall mean the amount borrowed and not the sanctioned limit of borrowings.
“Maximum allowable exposure <= [Total Borrowed Funds +(0.5*Net Worth)]”
[Circular No: 62/2024]
