Delhi HC to Hear F&O Margin Dispute Case

Court to decide who receives the interest on client margin fixed deposits

- Neha Joshi

The Delhi High Court will on Wednesday hear a public interest litigation (PIL) that puts the spotlight on a contentious yet under-examined issue in India's ₹160-trillion futures and options (F&O) market: the fate of interest earned on margin money that traders deposit with brokers.

Every day, millions of Indian traders participating in the fast-paced F&O market have to deposit "margin money" as security against market risk. This capital—locked up for the entire period their position is open, ranging from a day to as long as two months—gets parked by stock brokers, often into fixed deposits or overnight mutual funds.

According to FY24 data from the National Stock Exchange annual report, traders collectively deposited over ₹160 trillion as margin, calculated as an average 20% margin on an F&O turnover of about ₹800 trillion.