Margin trading takes place on the stock market.Image credit source: Unsplash
If you are investing in the stock market, then this news is just for you. Market regulator SEBI has recently made some changes in the rules related to margin trading, which comes as a big relief to traders. What is margin trading and what changes has SEBI made in the rules related to it? You will get its complete details here.
What is margin trading?
This is a facility where an investor can buy more shares for less money. By availing this facility, investors can get up to 4 times the amount borrowed from brokers. If a person has Rs 50,000 and wants to buy shares worth Rs 2 lakh, he can trade by borrowing money from MTF (Margin Trading Fund). However, the broker charges him interest on the remaining amount.
SEBI gave this great relief
Now market regulator SEBI has issued a circular on margin trading. It said that now the shares purchased by investors through margin trading and their shares or units of exchange-traded funds (ETFs) deposited with brokers as collateral will be kept separate in the calculation, these two categories will not be calculated combined.
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If the broker has taken cash collateral from the client as margin to avail the margin trading facility. Whereas the trading member has given cash collateral to the clearing company for the liquidation of the client. This will be considered as maintenance margin.
Investing in the stock market can be risky. That is why it is said that before investing in the stock market, you should consult your financial advisors. TV9 Digital also gives you the same advice.
