Peak
Margin is a regulatory measure that mandates brokers to collect a minimum
margin from clients before executing any intraday or delivery orders in the
Cash and derivatives segment. The main objective of Peak Margin is to curb
excessive leverage in intraday and derivatives positions.
Clearing
corporations play a pivotal role in determining Peak Margin by taking four
snapshots at predefined time intervals throughout the day to calculate margin
requirements on open positions. The highest margin requirement among these
snapshots is considered as the Peak Margin.
The
implementation of Peak Margin aims to promote effective risk management and
mitigate potential market volatility resulting from excessive leverage. It
ensures that traders maintain adequate margin cover to fulfil their obligations
and reduces the risk of default.
Brokers
are tasked with ensuring that their clients follow the prescribed Peak Margin
requirements set by regulators. Compliance with Peak Margin requirements is
essential for traders wishing to engage in intraday and derivatives trading in
the Cash segment.
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