In short: On 22 October 2026, SEBI issued a circular on early pay-in (EPI) of securities in the cash segment. Clearing corporations will not collect margin from brokers on a client's later buy or sell positions, up to the value of EPI they have accepted. The framework starts four months after issue, which The Hindu reports as 22 February 2027.

What has SEBI decided?

SEBI's circular (HO/(320)2026-MRD-POD2/I/24141/2026) is addressed to stock exchanges, clearing corporations, depositories and stock brokers. It covers clients who have a net sell obligation in a settlement and whose EPI request for the sold securities has been successfully accepted by the clearing corporation.

For such clients, the clearing corporation must, on a real-time basis, stop collecting margin from the trading member or clearing member on the client's later buy or sell positions. This applies up to the amount of the accepted EPI.

SEBI took this decision after considering proposals from the Broker ISF, recommendations of its Risk Management Review Committee (RMRC) and internal deliberations.

What is early pay-in?

Early pay-in lets an investor who has sold shares hand them over to the clearing corporation before the scheduled settlement date. Earlier exchange and clearing corporation guidelines already treat this early delivery as margin. In the circular's words, the sale value of such securities can count as margin for other positions across all segments, up to 100%.

How will the relief work?

  1. Value is fixed on the trade date. The clearing corporation works out the usable EPI value. This is the lower of the value of EPI done and the value of the securities sold.
  2. New positions are checked after deducting that value. If the client takes a position in the cash segment on the same trade date relying on the EPI, the clearing corporation checks the client's margin only after reducing it by the usable EPI value.
  3. Squaring off removes the benefit. If the client squares off the sale position for which the EPI benefit was used, the EPI value is taken away. Any resulting margin shortfall at client level is blocked from the trading member's or clearing member's own (proprietary) collateral by the clearing corporation.

The shortfall rule in step 3 does not apply to trade-for-trade (TFT) securities. SEBI notes that these are settled on a gross basis.

What are the duties of brokers and clearing corporations?

  • Trading members: Their risk management must let a client square off an EPI-linked position, or take a new position, only if the client's required margin is available with the member.
  • Clearing corporations: They must amend relevant bye-laws, rules and regulations, carry out any system changes, and publish the circular's provisions on their websites.

When does it start, and what is the legal basis?

The circular takes effect four months from its date of issue. The Hindu reports the date as 22 February 2027, which fits that period. SEBI issued it under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 51 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018. Its stated aim is to protect investors and to promote and regulate the securities market.

Who is affected?

Mainly investors who sell shares and complete early pay-in, and who then trade again in the cash segment on the same day. They may need less additional margin for those trades. Brokers and clearing members also benefit, since they need not collect margin to the extent the EPI covers. The Hindu reports that the safeguards against shortfalls remain.

What should investors do?

Nothing is required immediately, as the framework is not yet in force. Investors who use EPI can ask their broker how it will apply the facility once it starts. They should keep in mind that a broker may allow a square-off or a new position only when the client's required margin is available.

Frequently asked questions

Does this remove margin requirements altogether?

No. The relief applies only up to the value of accepted EPI. Margin is also checked after deducting that value, and brokers must still ensure the required client margin is available.

What happens if I square off the position after using the EPI benefit?

The EPI value is removed. If this leaves a margin shortfall, the clearing corporation blocks the shortfall from the trading or clearing member's own collateral. This does not apply to trade-for-trade securities.

When will the new framework apply?

It comes into force four months after the circular's issue date of 22 October 2026. The Hindu reports this as 22 February 2027.

Sources

Not legal advice. This page explains the law in general terms. Rules, fees and limits change, and your facts matter. Check the official source or consult a qualified advocate before acting. Disclaimer