Margin requirement in Public Issues

SEBI Board Meeting - Press Release No. 59/2010, dated 6-3-2010

The Board met today in Mumbai and took the following decisions: 

A. Margin Requirement in Public Issues 

The Board decided that with effect from 1st May 2010, all types of investors would be required to bring in 100% of the application money as margin along with the application for securities in public issues. This would avoid inflated demand in public issues and provide level playing field to all investors subscribing for securities. 

B. Reservation for Employees in Public/Rights Issues 

The Board also decided that the reservation for employees in public/rights issues would be available to employees of subsidiaries and material associates of the issuer whose financial statements are consolidated with the issuer’s financial statements. 

C. Reforms in Derivatives Market 

The Board further decided in principle to allow the Stock Exchanges to introduce: 

a. equity derivatives contracts with tenures up to 5 years;

b. derivative contracts on volatility indexes which have suitable track record, and

c. physical settlement of equity derivatives.