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BSE to hike margins on B1, B2 scrips

NetScribes/Salil Panchal

The Bombay Stock Exchange, in a move to further strengthen safety in the stock markets, has decided to increase the existing margins and tighten exposure norms for brokers trading in the B1 and B2 group scrips. This would reduce the possibility of increased rigging and exposure in some of the illiquid counters in this segment of stocks.

The truncated BSE governing board has taken this in-principle decision, but is likely to announce the revised margins structure by the end of the week.

The BSE executive director and acting administrator A N Joshi told NetScribes that the margins would be revised in such a way that higher exposures will attract higher margins. "The new structure, once announced, will apply immediately," he said.

In accordance with the directives issued by Sebi, the Exchange has said that the gross exposure of a member trading in the B1 and B2 groups in the settlement period cannot exceed 20 times his base minimum capital and the additional capital deposited with the Exchange. This exposure would include net cumulative outstanding purchases and sales, and outstanding positions in the rolling settlement and demat segments.

The BSE top brass has, however, remained tightlipped on the tinkering with the existing margin structures.

Trading volumes in these two segments have remained low over the past 8-9 months. On the BSE, the B1 segment contributes 8-9 per cent of the total daily trading volumes, while the B2 group contributes a marginal 0.5-2 per cent.

Joshi said that the exchange would continue to function without an administrator till the elections in the first week of April. "This is something that Sebi will have to tackle and the final decision will have to be taken by them," he said.

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