Additional Margin On Stocks With High Promoter Pledge - List released by exchanges

Both NSE and BSE, as per notification dated 25th Oct, 2019, decided to impose a minimum margin of 35% on stocks including those part of the F&O market if they satisfy the following criteria: 
  1. Market capitalisation is greater than Rs 1,000 crore. 
  2. Pledged holding of the promoter accounts for more than 25% of the total number of the issued shares of the company
  3. Concentration of top 25 clients in trading during the last 30 days is 30% or more. 
  4. High-low price variation in the scrip in the last three months is greater than 40%.
This was effective from 1 Nov, 2019.  

Following is the List of securities shortlisted in Surveillance measure in respect of companies with high promoter pledge Framework w.e.f. November 04, 2019  

Metropolis Healthcare Limited
Sadbhav Infrastructure Project
Future Enterprises Limited

Following points are noteworthy with respect to these stocks:

1.  Three of these stocks (marked in RED) are in F&O. With higher imposition of margins, we have seen short positions being covered and rise of 15-30% since the notification first came on Oct 25. In coming time, any addition or deletion to this list, specially those stocks which are trading in F&O segments may lead to volatility. 

2. The additional surveillance brought to reduce volatility in stocks having high promoter pledge may ensure market safety and safeguarding of investors interest to a certain level.  Certain institutions which deal exclusively in F&O arbitrage strategies may feel the pinch as volatility dies down in these names.

3. With new encumbrance norms effective 1st Oct, 2019 by SEBI  and now higher margins on such stocks, pledging of stocks used for unethical measures will reduce drastically. This should ensure a much more stronger, healthier bull market on resumption.

The author may have positions in the stocks as mentioned in the article above, please assume us to be biased. This is not a recommendation to buy or sell securities. This is purely information about the company mentioned.  Equity investing contain risks and please consult your financial adviser for any buy and sell securities!

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