SEBI lets brokers reuse margin from clients' share sales

Markets No. 99 27 October 2026 · 1 min read · By Pranami Hayaran

When a client sells shares and hands them over early to the clearing corporation, the broker gets relief from margin requirements on the client's next trades.

Clients already got this benefit in 2024. Earlier, only 80% of the sale value could be used as margin. The remaining 20% was held back. That deduction was removed in October 2024.

SEBI's new circular of 22 October 2026 extends the relief to brokers. The clearing corporation will no longer collect margin from the broker on the client's other trades that day, up to the lower of the value of shares handed over and the value sold. This applies only to cash-market trades.

There's a catch. If the client buys back the shares, the relief is withdrawn. Any margin shortfall must then be covered using the broker's own collateral.

The rule takes effect on 22 February 2027.

The takeaway: clients got their margin benefit in 2024. This time, SEBI is freeing up brokers' money, while making brokers bear the risk if a sale is reversed.

2 bars: in April 2023 a sale of 100 handed over early counted as 80 of margin; since October 2024 it counts as the full 100.

4 boxes top to bottom: the client sells and hands the shares over early, the clearing corporation accepts them, the client trades again with no margin asked of the broker, and if the client buys the shares back the gap comes out of the broker's own deposit.

A timeline of 4 dates: April 2023, October 2024, October 2026 and February 2027, each easing margin for shares handed over early.

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