NSE trims list of securities eligible as collateral by over 1,000, making F&O trading harder

The National Stock Exchange (NSE) has tightened the eligibility criteria for over a thousand securities to be accepted as collateral, usually pledged by clients for margin requirement for intraday or derivatives (Futures & Options) trading.

The changes will come into effect from 1 August 2024 in a graded manner.

NSE Clearing Limited will disallow securities with low trading activity or high impact cost, effectively eliminating 1,010 securities from the acceptable list of about 1,730 eligible ones to be pledged as collateral. This would leave fewer securities for F&O and intraday traders to pledge.

Interestingly, as many as 25 of the securities being removed have a market capitalisation of more than Rs 20,000 crore each. Among the high market capitalisation stocks that will be hit by this circular are Adani Power, Yes Bank, Suzlon, Paytm (One 97 Communications), HUDCO, Bharat Dynamics, Go Digit General Insurance, and many more.

NSE said in a circular on July 10 that its clearing arm will approve and accept as collateral only those equity securities that have been traded at least 99 percent of the days over the previous six months and have an impact cost of up to 0.1 percent for an order value of Rs 1 lakh. “Equity securities not fulfilling the above criteria shall not be accepted from 1 August 2024,” said the circular.