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Mumbai, May 5 SEBI on Monday gave the go ahead to stock exchanges to introduce cross margining for institutional investors between cash and derivative markets to improve the efficiency of the use of margin capital for market participants.

Margining in the cash market was introduced only last month for institutional investors, while the same was already applicable in the derivatives market.

Recently, SEBI directed institutional investors to pay margins in the cash market on T+1 basis, or one day after the trade. From next month, they have to pay upfront margins, which have to be paid before a trade is done.

“As an initial step towards cross margining across cash and derivatives markets, margins shall be levied on cash market positions which have off-setting stock futures positions in the derivatives market,” said a SEBI circular.

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