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Petition challenging Sebi's margin rule dismissed

The Delhi high court on Monday dismissed a petition challenging the application of "margin rule" to individual investors during the trading in the stock exchange, saying the petitioner had no locus standi to file such a writ.

A division Bench comprising Chief Justice Arijit Passayat and Justice D K Jain dismissed the petition after Sebi's counsel Alpana Poddar submitted that there was no discrimination in the applicability of the margin rule.

She said Securities and Exchange Board of India in a press release issued on March 5 this year had clarified that "no exemption would be allowed in the applicability of the volatility margin in any class of investors".

A public interest litigation by advocate Manohar Lal Sharma had alleged that Sebi had allowed apply margin rule against common investors and exempted foreign institutional investors and mutual funds from it.

Describing the step as discriminatory, Sharma said this was adversely affecting the small investors at the cost of big brokers, FIIs and mutual funds.

Sebi counsel said all scrips would attract additional margin at the rate of 10 per cent at the end of the day's trading on all outstanding sale position.

This was a temporary measure and would be reviewed in due course, Poddar said adding that Sebi has issued direction to all stock exchanges to implement these measures immediately.

The PIL had described applicability of the margin rule as illegal claiming that there was no statutory rule under, which Sebi could compel a set of investors to perform transactions in a particular manner and waive off the conditions to others.

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