Personal Finance Blog India –

Margin Short-Fall,Unauthorized Trading and Foreign Investors:

Recently SEBI have decided to take stingent action against unauthorised trading on clients account by stock brokers and margin short falls in derivative market across equity and currency segment.

SEBI has issued circular no CIR/DNPD/7/2011,regarding margin short falls in derivative segment.Vide this circular SEBI has prescribed stingent penalties to be levied on clients failing to meet their margin obligations.The client level margins will be monitored by stock exchange on daily basis and stock broker would report the information with respect to margins collected from each client.

Penalty prescribed by SEBI is as follow:

Margin shortfall Per day penalty as % of margin shortfall
(Rs 1 lakh) AND (< 10% of applicable Margin ) 0.5%
(>Rs 1 lakh) OR (> 10% of applicable Margin ) 1%

In case of repeated failures on part of trader to meet its margin obligations,the penalties could scale up to 5% of the margin shortage amount.

Also,SEBI repeatedly received complaints from investors about non authorized trading by stock brokers in their accounts.So SEBI has directed stock exchanges to send details of transactions to the investors through SMS and email at the end of every working day.Stock brokers will upload mobile numbers and e-mails and same will be confirmed by exchanges.SEBI have asked exchanges to start this facility within 4 months from date of circular i.e. 2nd August.

Foreign investors who meet KYC requirements can invest in Indian mutual fund schemes.There will be the limited subscription.Mutual funds can accept subscriptions till it reaches US $ 8 Billion in equity scheme and US $2.5 billion in debt scheme.Remaining limit of US $2 billion in equity scheme and US $0.5 billion in debt scheme shall be auctioned by SEBI through bidding process.Facilities like SIP,STP,SWP and switch will not be available for foreign investments.


Category: Mutual Funds


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