The regulator is also considering bringing institutional investors under the ambit of different margins, which are currently collected from retail investors only, sources said.
At its weekly meeting with the surveillance departments of SEs on Monday, the Sebi officials reviewed the current market situation and decided to cut the member-wide exposure limits and intra-day trading limits as a measure to contain volatility at the broker level.
The applicable exposure in respect of 48 securities of the 53 securities available for derivatives trading will be reduced by 20 per cent. This means that if a member has a base minimum capital of, say, Rs 1 crore, in the earlier regime he could take a position of Rs 8.50 crore. But with the reduction in the exposure limit by 20 per cent, this position will come down to Rs 6.50 crore.
NSE has also decided to reduce the existing turnover limit of 33.33 times to 25 times. In simple terms, a member can now take position of only 25 times, which will include the gross figure of intra-day buying and selling. The base minimum capital of the member includes cash deposit and other deposits in the form of securities or bank guarantees with the clearing corporation and the exchange.
Accordingly, BSE has also cut its gross exposure limits to 12 times of the base minimum and additional capital deposited with the exchange by the members, instead of the earlier limit of 15 times, which is a reduction of 200 per cent. It also drastically trimmed the intra-day trading limits from 33.33 times of the capital deposited with the exchange by the members to 25 per cent. Market observers pointed out that now the most logical step for the regulator is to bring institutional investors under its ambit as 75 per cent of the trades taking place in the cash as well as derivatives segments are undertaken by institutional players.
Currently, this issue is being discussed by the Sebi-appointed Secondary Markets Advisory Committee (SMAC).