India’s market regulator, SEBI, has unveiled a comprehensive reform package aimed at refining the Margin Trading Facility (MTF). The proposal seeks to balance increased operational flexibility with robust safeguards to protect the broader financial ecosystem.
A core component of the plan involves raising the net-worth mandate for brokers to Rs 5 crore. This strategic move is designed to ensure that firms participating in margin financing possess the necessary capital reserves to withstand potential market volatility.
Beyond stricter capital requirements, the regulator is looking to modernize the industry by allowing Limited Liability Partnerships (LLPs) to provide MTF services. This shift is expected to diversify the pool of funding providers and enhance overall liquidity.
By broadening the avenues for capital funding, SEBI aims to foster a more efficient trading environment. These proposed norms represent a critical step in modernizing risk management frameworks while encouraging broader participation in India’s dynamic stock markets.
