Sebi Proposes EPI for Commodity Options

New Delhi, May 5 (PTI) Markets regulator Sebi on Tuesday proposed extending the benefit of the early pay-in (EPI) facility, currently available on futures contracts, to options contracts in the commodity derivatives segment.

Under the proposal, clearing corporations will offer an early pay-in facility to market participants, permitting them to deposit certified goods to the clearing corporation's accredited warehouse against relevant derivatives contracts sold, Sebi said in its consultation paper.

"For such short positions against which early pay-in has been made, based on risk perception, clearing corporations may exempt imposition of all types of margins. However, clearing corporations shall continue to collect mark to market margins from such market participants against such positions," it added.


The proposal came after Sebi received representations from stakeholders stating that the early pay-in benefit is currently available only for futures contracts. It has been requested that the benefit also be made applicable to options contracts.

EPI is a facility permitting investors to deliver securities from their demat accounts to the clearing corporation before the standard settlement day. This method is commonly used for sales, immediately blocks shares, avoids margin requirements and short-delivery penalties, and allows immediate utilisation of sale proceeds.

The Securities and Exchange Board of India (Sebi) has sought public comments on the proposals till May 26.