RBI's new rule could halve trading firms' profit margins
The Reserve Bank of India (RBI) just announced that, starting April 1, 2026, banks will have to ensure credit to capital-market intermediaries is fully collateralised, with customers required to provide 100% eligible collateral;
the rule applies to most exposures but includes specific permitted exceptions such as intraday limits for settlement pay-ins and limited market-making allowances.
This move is set to push up the cost of intraday and margin trading, and, according to industry estimates, could cut trading firms' profit margins by as much as half.
Fewer trades, less liquidity
If you're into trading or follow the markets, this rule might mean fewer trades and less liquidity—especially in derivatives, where volumes could drop by 20-30%.
That can lead to wider spreads and higher costs for investors.
The RBI says it's sticking with the rule to curb risky speculation since most retail traders end up losing money anyway.
Banks will also limit their exposure to these trades going forward.