FII demand to ease derivative margins to be spiked

MUMBAI: SEBI is unlikely to agree to foreign institutional investors'' demand for relaxing margin requirements in the derivative segment. FII representatives raised this issue at a recent meeting with the Sebi chairman, and Sebi in turn referred it to a sub-committee to look into the matter.
According sources, the sub-group which was formed to look into the issue is not in favour of making any relaxation on margin norms in derivatives for FIIs.
Unlike in cash market, the FIIs are required to pay margins for trading in derivative market, which varies between 10-30% on the transactions and outstandings.
The sub-committee is of the view that no relaxation should be made to FIIs for trading in derivatives where there is no actual physical settlement. Derivative transaction on the bourses are now settled in cash.
Early this year, the Reserve bank allowed FIIs to trade in all derivative products available in the market. Earlier though Sebi had allowed trading of various derivative products like index options, individual stock futures and options, FIIs were permitted to trade only in index futures.
It also raised the FII exposure limit and treated them on par with the other trading members in derivatives. But FIIs have not been a major players in the derivatives segment.
FIIs also demanded that Sebi should do away with the registration fees it charges as it is not being charged anywhere in the world. Sebi now charges a registration fee of $10,000 for 5 years.