NSE Tightens Collateral Rules:

The National Stock Exchange (NSE) of India is making it harder for traders to use certain stocks as collateral for margin requirements in intraday or derivatives (Futures & Options) trading. This means that from August 1, 2024, many stocks that traders currently pledge to meet margin requirements will no longer be eligible.

Here’s a simpler breakdown:

New Rules: NSE’s clearing arm will only accept stocks that have been actively traded 99% of the time over the past six months and have low transaction costs.
Big Change: Over 1,000 stocks will be removed from the list of acceptable collateral, out of the current 1,730 eligible ones. This leaves traders with fewer options to pledge.
Impact: Some big companies like Adani Power, Yes Bank, Suzlon, and Paytm are among those whose stocks will be affected. Even though these companies have high market capitalizations, their stocks won’t meet the new criteria.
Why: The aim is to only allow stocks that are easy to trade and have low costs associated with trading them.
Effect on Traders: The total value of stocks currently used as collateral is about Rs 73,500 crore. The real impact of these changes will depend on whether brokers will still accept the disqualified stocks as collateral.

NSE will release a final list of acceptable stocks in its monthly circular, giving traders a clearer picture of which stocks can still be used as collateral.