Market regulator Sebi on Wednesday increased the minimum deposit that a stock broker should maintain to trade on the bourses up to Rs 50 lakh from Rs 10 lakh earlier. The hike was mainly aimed at putting in a safeguard for all those brokers who offer high frequency algorithmic trading — the buy-sell transactions that are initiated by computers rather than through human intervention.
The Base Minimum Capital (BMC) is the deposit maintained by a broker against which no exposure for trades is allowed. The last time the BMC requirement was hiked was in 1996. BMC is the deposit that is kept with a bank to meet any contingency in any segment of the exchange and is linked to the value of turnover generated by a broker. In other words, if the volume of algo trades rises, the broker will be required to keep a higher amount as BMC. The changes will be in place by March 31 next year, a Sebi release said.
Brokers said one of the main triggers for the change in the BMC requirement was the NSE flash crash on October 5 when, although the nifty crashed 15.5%, it did not stop trading and orders were executed.
Source:- http://timesofindia.indiatimes.com/
The Base Minimum Capital (BMC) is the deposit maintained by a broker against which no exposure for trades is allowed. The last time the BMC requirement was hiked was in 1996. BMC is the deposit that is kept with a bank to meet any contingency in any segment of the exchange and is linked to the value of turnover generated by a broker. In other words, if the volume of algo trades rises, the broker will be required to keep a higher amount as BMC. The changes will be in place by March 31 next year, a Sebi release said.
Brokers said one of the main triggers for the change in the BMC requirement was the NSE flash crash on October 5 when, although the nifty crashed 15.5%, it did not stop trading and orders were executed.
Source:- http://timesofindia.indiatimes.com/
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