Sebi Extends Deadline For Brokers To File Net Worth Certificate For Offering Margin Trading

The Securities and Exchange Board of India (Sebi) on August 26, 2025 extended the deadlines for stock brokers to submit their net worth certificates to stock exchanges, a regulatory requirement to continue being eligible to offer margin trading facility (MTF) to their clients.

Stock brokers were required to submit half-yearly certificates from an auditor confirming their net worth to the stock exchanges twice a year – one for the half-year ending March 31, and the other for the half-year ending September 30. Previously, brokers were allowed one month’s time from the end of the half-year period to file their certificates, by April 30 and October 31.

Sebi has now extended this timeline to May 31 and November 15, respectively. That means, brokers will get 60 days to submit their audited net worth certificate for the half-year ending March 31, and 45 days to file for the half-year ending September 30.

“In order to be eligible to offer the margin trading facility to their clients, the stock brokers shall submit the certificate as stated in para 1 above within 45 days from the half-year ending on September 30 and within 60 days from the half-year ended on March 31,” Sebi said in a circular. Sebi said the relaxation was given “based on representations received from market participants and with a view to promote ease of doing business.”

Sebi has further directed stock exchanges to amend their bye-laws, rules, and regulations to implement the change and to circulate the updated requirements to their members. The provisions of the circular came into effect from the date of the release of the circular, August 26 onwards.

The market regulator said the measure aims “to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.”

Eligibility Criteria For Brokers To Offer MTF

• The broker should be registered as a corporate member

• Brokers must maintain a minimum net worth of Rs 3 crore

• Net worth has to be calculated in line with Sebi regulations

• Prior approval from the respective stock exchange, such as NSE or BSE, is required before offering MTF

What Is Margin Trading

In order to understand what margin trading is, let us first dive into what ‘margin’ means. Margin is the amount or security an investor provides to the stock broker before executing a trade. It serves as a security for the broker and allows the investor to take a bigger position in the market than they could with just their own funds. In simple terms, it represents the extent of leverage a broker allows a client to use while trading in securities.

Margin trading is a facility offered by stock brokers that allows clients to buy or sell securities without paying the full amount upfront for purchases or delivering the full quantity of shares sold. The portion paid by the investor is called the margin, while the unpaid portion is the leverage extended by the broker.

Investors can provide this margin either in cash or in the form of securities. When securities are deposited as margin, they are referred to as ‘collateral’.

According to the National Securities Depository (NSDL) website, margin requirements help investors to buy securities of their choice without paying the full amount of money beforehand. It also helps in increasing trade volumes. By enforcing margin requirements, exchanges control the trading activity in the market. Margin requirements are also used by exchanges to manage settlement risks.