NSE directs brokers to implement risk reduction mode

Tags: NSE, Stock Market
The country's leading bourse, the National Stock Exchange (NSE), has asked trading members to 'compulsorily' implement a risk reduction mode when 95 per cent of their capital is utilised towards margins.

The move is applicable for the currency derivatives segment and would be effective from February 10, NSE said in a circular.

"To enhance the risk management capabilities of the members and to avoid a situation of disablements, member shall be compulsorily placed in risk reduction mode when 95 per cent of the member's capital is utilised towards margins," it said.

The stock broker would be moved back to the normal risk management mode as and when the collateral of the stock broker was lower than 90 per cent utilisation level.

Under this mode, all unexecuted trades would be cancelled when 95 per cent of the stock broker's collateral available for adjustment against margins gets utilised.

When a member moves to risk reduction mode, fresh orders placed by trading member to reduce open positions will be accepted.

Besides, these fresh orders will be checked for sufficiency of margins and those which do not satisfy the criteria will be rejected.

In 2012, the exchange had set the limit for 'risk-reduction mode' at 90 per cent.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Amidst Sino-Indian bonhomie, the Tibet issue cannot be wished away

    Tibet did not figure in the three-day high-level meetings between India and the People’s Republic of China (PRC).

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Varun Dutt

<b>Riskfactor</b>: Intertemporal choices

Intertemporal choice is the study of the relative value people ...

Parvez Imam

Why we all have blood on our hands

What does the Jammu and Kashmir flood make us think? ...

Dharmendra Khandal

The peculiar possibilities of animal poop

You can tell a lot about an animal by its ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture