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NSE extends cross margin facilty to ETFs

Cross margining reduces the margin requirement and trading costs and thereby helps traders and investors.

November 21, 2013 10:48 IST | India Infoline News Service
The National Stock Exchange (NSE) has extended cross margining to exchange-traded funds (ETFs).

Till now, the facility was available to equity stocks, index futures and stock futures segments.

Cross margining reduces the margin requirement and trading costs and thereby helps traders and investors.

“The positions of clients in both the capital market and F&O (futures and options) segments to the extent that these offset each other shall be considered for the purpose of cross margining,” NSE said in a circular.

Cross margining on ETFs has been allowed between ETFs and constituent stock futures in the F&O segment and the constituent stock position in the cash and index futures segments.

“To avail of the cross margin benefit... the constituents and the number of units of the constituent stocks/stock futures required in the basket to be considered as a complete replica of the ETF shall be the same as that of the respective underlying index,” the circular added.

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