RBI Delay Of Revised Liquidity Framework Lifts BSE Shares By Nearly 7% In Early Trade

Shares of capital market-linked firms surged on Wednesday in early trade after the Reserve Bank of India (RBI) pushed back tighter liquidity rules by three months. This eased near-term pressure on brokers and margin funding players.

At 10:09 am, Bombay Stock Exchange (BSE) shares were trading 6.57% higher at ₹2860 per share on the National Stock Exchange (NSE). Shares of other capital market-linked firms also saw a surge.

Key Trigger Behind Surge

The surge comes on the back of the RBI’s deferred implementation of its revised liquidity framework to 1 July 2026. The rules were earlier set to take effect from 1 April. The extension allows brokers to continue using 50% margin-backed bank guarantees for another three months.

The delay comes at a time when the industry is already adjusting to a higher securities transaction tax (STT), which took effect from today.

What Do The RBI Rules Say?

The central bank’s February amendment had tightened funding norms for capital market intermediaries. According to it:

• Banks must provide only fully secured funding.

• Existing practice allowed partial backing using unsecured instruments.

• Margin trading facilities require 100% collateral.

• At least 50% of this collateral must be in cash.

• Equity collateral will face a 40% haircut.

The changes are seen as a significant shift from earlier norms. Market participants had flagged concerns over higher funding costs and tighter liquidity.

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Brokerage View On Impact

Brokerages like Jefferies had earlier estimated that the new rules could cut BSE’s earnings by around 10%. The hit would largely come from higher costs for proprietary traders due to increased cash collateral requirements.

Following the RBI’s latest move, the brokerage said the transition may now be smoother. It noted that although higher STT and tighter liquidity may weigh on sentiment, the hit to volumes may not be significant.

Sources:

The Economic Times

Mint