SEBI directs clearing corporations to waive margin on trades funded by Early Pay-in

On 22 October 2026, the Securities and Exchange Board of India issued a circular to all recognised stock exchanges, clearing corporations, depositories and stock brokers on margin treatment following an Early Pay-in (EPI) of securities in the cash segment. Existing exchange and clearing-corporation circulars already treat a client's EPI, delivering shares before settlement to meet a sale obligation, as margin collected for that sale transaction, and treat the sale proceeds credited afterward as margin for the client's other positions, up to the full EPI value. SEBI has now directed that, where a client has a net sell obligation in a settlement and the clearing corporation has accepted the client's EPI request, the clearing corporation must, in real time, stop collecting margin from the trading or clearing member on the client's subsequent buy or sell positions, up to the accepted EPI amount.

If the client squares off the sale position for which the EPI was given, the EPI value is withdrawn and any resulting margin shortfall is blocked from the member's own proprietary collateral, except for trade-for-trade securities settled gross. Clearing corporations must amend their bye-laws and systems accordingly and disclose the framework on their websites. Issued under Section 11(1) of the SEBI Act, 1992 read with Regulation 51 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, the framework takes effect four months after issuance, around late February 2027.