Sebi may reduce non-expiry day margins for long-term F&O boost

Sebi is considering reducing the ELM from 2% to 0.5-1% on non-expiry days only for a hedged portfolio, with an unhedged portfolio attracting the normal 2% ELM.

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On expiry day, the ELM would be retained at SPAN plus 4%, the second person said.

For instance, if the SPAN on a Nifty hedged options position at 26,000 index value is ₹10,000 and the ELM is 2% of the notional value of the contract, the total margin would work out to ₹49,000—2% of the Nifty contract value of ₹19.5 lakh (26,000x75 shares per contract) plus the SPAN margin. If the ELM were halved to 1% of the notional value, the total margin would drop substantially to ₹9,500, this person said.

A hedged position is one that is covered by an opposite trade on the same security in a differ-