Key change
Clearing corporations will not collect margin from trading/clearing members on a client's subsequent cash-segment buy or sell positions — up to the value of Early Pay-In accepted by the clearing corporation. Effective 22 February 2027.
What happened
On 22 October 2026, the Securities and Exchange Board of India (SEBI) issued Circular No. HO/(320)2026-MRD-POD2/I/24141/2026 titled "Margin Waiver on Subsequent Buy/Sell Transactions Post Early Pay-In (EPI) in Cash Segment", through its Market Regulation Department. The circular is addressed to all recognised stock exchanges, all recognised clearing corporations, all depositories and all stock brokers.
The circular tackles a long-standing friction in the equity cash segment: when a client sells shares and delivers them early through the Early Pay-In (EPI) mechanism, the sale itself settles without risk — yet if the same client uses the sale proceeds to buy another stock the same day, the broker is still required to fund the upfront margin on the new purchase (typically around 20%) out of its own trading limits with the clearing corporation. SEBI now removes that double blockage, up to the value of the accepted EPI.
The move follows proposals received from the Brokers' Industry Standards Forum (ISF) and deliberations by SEBI's Risk Management Review Committee (RMRC). It is issued under Section 11(1) of the SEBI Act, 1992 read with Regulation 51 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, and with the approval of the competent authority.
The new margin-waiver framework
The core rule (para 3)
Where a client has a net sell obligation in a settlement and the EPI request for the sold securities has been successfully accepted by the clearing corporation, the clearing corporation shall, on a real-time basis, not collect margin from the Trading Member / Clearing Member on the subsequent buy/sell positions of the client — up to the amount of such accepted EPI.
How the EPI value is computed (para 4)
The reversal safeguard (para 4.3)
SEBI has built in a clawback for the one obvious gaming risk — squaring off the sale that created the EPI benefit:
- If the client squares off the sale position for which the EPI benefit was availed, the EPI value is removed.
- Any margin shortfall arising at the client level from that removal is blocked by the clearing corporation from the TM/CM's proprietary collateral.
- Trade-for-trade (TFT) securities are exempt from this clawback, since they settle on a gross basis.
Old position vs new position
Who is affected
- Stock brokers (TMs/CMs) — the direct beneficiaries. They no longer need to fund upfront margin from their own trading limits when a client re-deploys EPI sale proceeds into same-day cash-segment positions. This frees working capital and reduces margin-funding costs, especially for active retail and proprietary desks.
- Clearing corporations — must implement the real-time waiver logic: compute available EPI value on trade date, apply the post-deduction margin check, operate the square-off clawback, and amend bye-laws/rules/regulations, carry out system changes, and disseminate the circular on their websites.
- Active cash-segment traders and investors — selling shares early via EPI and buying another stock the same day becomes cheaper to execute; the 20%-style double margin block on the second leg disappears up to the accepted EPI value.
- Depositories and stock exchanges — as addressees of the circular, they carry dissemination and coordination responsibilities within their ecosystems.
A worked example
A client sells shares worth ₹1,00,000 from her demat account and delivers them early through EPI; the clearing corporation accepts the EPI. Later the same day she buys another stock worth ₹80,000. Under the new framework, the clearing corporation will not collect margin from her broker on that ₹80,000 purchase (up to the accepted EPI value) — whereas earlier, the broker had to block roughly 20% of the purchase value from its own limits. If she instead squares off the original sale, the EPI value is withdrawn and any resulting margin shortfall is blocked from the broker's proprietary collateral.
What brokers and market participants must do next
- Trading Members: review risk-management systems so that a client is allowed to square off the EPI position or take a new position only if the client's requisite margins are available with the TM (para 5).
- Clearing corporations: amend bye-laws, rules and regulations as necessary; complete system changes for real-time EPI-value computation, the post-deduction margin check, and the square-off clawback; and publish the circular's provisions on their websites (para 6).
- Compliance teams: note the effective date — 22 February 2027 (four months from issuance, per para 7) — and align internal policies, client communications and margin calculators accordingly.
- Note the carve-out: trade-for-trade securities remain outside the clawback; gross-settlement logic continues there.
Why this matters
The circular removes a genuine inefficiency: risk-free, already-settled sale value (accepted EPI) was still triggering fresh margin collection on the client's very next trade, forcing brokers to intermediate with their own capital. By making the waiver a real-time, SEBI-mandated clearing-corporation obligation — with a defined EPI-value formula, a same-trade-date application window, and a proprietary-collateral clawback against square-off gaming — SEBI improves capital efficiency in cash equities while keeping the risk-containment architecture intact. It is an easing measure, but a ring-fenced one.
Frequently asked questions
Q1. What exactly has SEBI waived in this circular?
SEBI has waived the collection of margin by clearing corporations from trading/clearing members on a client's subsequent buy or sell positions in the cash segment, up to the value of Early Pay-In accepted by the clearing corporation (Circular No. HO/(320)2026-MRD-POD2/I/24141/2026, dated 22 October 2026).
Q2. When does the new framework take effect?
The provisions come into force four months from the date of issuance — i.e., on 22 February 2027 (para 7 of the circular).
Q3. What conditions must be met for the waiver to apply?
Two cumulative conditions: the client must have a net sell obligation in the settlement, and the EPI request for the sold securities must have been successfully accepted by the clearing corporation.
Q4. How is the "available EPI value" calculated?
It is the lower of the EPI value done or the value of securities sold, computed by the clearing corporation on the trade date upon accepting the EPI request.
Q5. What happens if the client squares off the sale position after availing the EPI benefit?
The EPI value is removed, and any margin shortfall arising at the client level is blocked by the clearing corporation from the trading/clearing member's proprietary collateral. Trade-for-trade securities are exempt from this clawback.
Q6. Does the waiver apply to derivatives positions too?
No. This circular covers subsequent buy/sell positions in the cash segment. (SEBI issued a separate EPI clarification for the commodity derivatives segment in June 2026.)
Q7. Who issued the circular and under what authority?
SEBI's Market Regulation Department, signed by General Manager Lamber Singh, in exercise of powers under Section 11(1) of the SEBI Act, 1992 read with Regulation 51 of the SECC Regulations, 2018, with the approval of the competent authority.
Sources
- Primary: SEBI Circular No. HO/(320)2026-MRD-POD2/I/24141/2026 — "Margin Waiver on Subsequent Buy/Sell Transactions Post Early Pay-In (EPI) in Cash Segment", dated 22 October 2026 (sebi.gov.in > Legal > Circulars; official PDF read in full).
- Pointer: LiveMint/Bloomberg — "Sebi eases margin rules for trades post EPI" (22 Oct 2026).
Verified against the official SEBI circular on 22 October 2026. Every factual claim above traces to the circular's paragraphs; anything the circular does not state has been excluded.
