Page 39 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes position. (e) The near-month stock futures positions are not considered for cross-margin benefit
three days prior to expiry (the last Thursday of every month) and there will be no change in the
margins on the F & O positions.
In December 2008, SEBI extended the cross margin facility across Cash and F&O segment and to
all the market participants. The salient features of the cross-margining are as under:

1. Cross margin is available across Cash and F&O segment and to all categories of market
participants.
2. The positions of clients in both the Cash and F&O segments to the extent they offset each
other shall be considered for the purpose of cross margining as per the following priority.
Index futures and constituent stock futures in F&O segment. Index futures and constituent
stock positions in Cash segment. Stock futures in F&O segment and stock positions in
Cash segment

3. In order to extend the cross margin benefit as per 2 (a) and (b) above, the basket of
constituent stock futures/stock positions shall be a complete replica of the index futures.
4. The positions in F&O segment for stock futures and index futures shall be in the same
expiry month to be eligible for cross margin benefit.
5. Positions in option contracts shall not be considered for cross margining benefit.
6. The Computation of cross margin shall be at client level on an on-line real time basis.

7. For institutional investors the positions in Cash segment shall be considered only after
confirmation by the custodian on T+1 basis and on confirmation by the clearing member
in F&O segment.
8. The positions in the Cash and F&O segment shall be considered for cross margining only
till time the margins are levied on such positions.

9. The positions which are eligible for offset shall be subject to spread margins. The spread
margins shall be 25% of the applicable upfront margins on the offsetting positions.

Government Securities Market

The government securities market has witnessed significant transformation in the 1990s. With
giving up of the responsibility of allocating resources from securities market, government
stopped expropriating seigniorage and started borrowing at near-market rates. Government
securities are now sold at market related coupon rates through a system of auctions instead of
earlier practice of issue of securities at very low rates just to reduce the cost of borrowing of the
government. Major reforms initiated in the primary market for government securities include
auction system (uniform price and multiple price method) for primary issuance of T-bills and
central government dated securities, a system of primary dealers and non-competitive bids to
widen investor base and promote retail participation, issuance of securities across maturities to
develop a yield curve from short to long end and provide benchmarks for rest of the debt
market, innovative instruments like, zero coupon bonds, floating rate bonds, bonds with
embedded derivatives, availability of full range (91-days, 182 days and 364-days) of T-bills, etc.
The reforms in the secondary market include Delivery versus Payment system for settling
scripless SGL transactions to reduce settlement risks, SGL Account II with RBI to enable financial
intermediaries to open custody (Constituent SGL) accounts and facilitate retail transactions in
scripless mode, enforcement of a trade-for-trade regime, settlement period of T+1 for all
transactions undertaken directly between SGL participants and for transactions routed through
NSE brokers, routing transactions through brokers of NSE, OTCEI and BSE, repos in all

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