SEBI waives margins on subsequent trades against early pay-in

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New framework allows clients to use the value of shares delivered for settlement to meet margin requirements on subsequent positions; to take effect in four months

By BL Mumbai Bureau

Updated - October 22, 2026 at 07:07 PM.

SEBI has also directed trading members to ensure that their risk management systems allow clients to square off positions backed by EPI or take new positions only when the requisite client margins are available with the trading member | Photo Credit: HEMANSHI KAMANI

The Securities and Exchange Board of India (SEBI) has allowed clients to use the value of shares delivered through early pay-in (EPI) towards margin requirements on subsequent buy and sell positions in the cash market, easing margin requirements for trades undertaken on the same day.

Under the framework, clearing corporations will not collect margins from trading or clearing members on a client's subsequent buy or sell positions, up to the value of securities for which the early pay-in request has been accepted. The facility will apply where a client has a net sell obligation in a settlement.

The decision was taken after considering proposals from the Broker Industry Standards Forum (ISF), recommendations of SEBI's Risk Management Review Committee (RMRC) and internal deliberations.

EPI guidelines

Early pay-in refers to the delivery of securities to the clearing corporation before the prescribed settlement deadline. Existing guidelines allow the value of shares delivered through EPI to be considered towards margin requirements for the sale transaction and subsequent positions.

Under the new framework, the clearing corporation will calculate the available EPI value on the trade date. This will be the lower of the value of the early pay-in made and the value of securities sold.

When a client takes a position in the cash segment on the same day using the EPI benefit, the clearing corporation will check the client's available margin after reducing the available EPI value.

However, if the client squares off the sale position in securities for which the EPI benefit was used, the EPI value will be removed. Any resulting margin shortfall at the client level will be blocked from the trading or clearing member's proprietary collateral.

This condition will not apply to trade-for-trade securities, as these transactions are settled on a gross basis.

Risk management

SEBI has also directed trading members to ensure that their risk management systems allow clients to square off positions backed by EPI or take new positions only when the requisite client margins are available with the trading member.

Clearing corporations must make the necessary changes to their rules and systems and publish the circular on their websites.

The provisions will come into force four months from the date of issuance of the circular.

Published on October 22, 2026

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