Description

BSE announces adjustments to cross margin weightages and spread margins for indices containing TATAMOTORS due to corporate demerger, effective October 13-16, 2025.

Summary

Indian Clearing Corporation Ltd. has announced adjustments to cross margin weightages following the demerger of Tata Motors Limited (TATAMOTORS). The circular outlines specific timeline for exclusion of TATAMOTORS from cross margin benefit calculations, revised weightage publication, and temporary increase in spread margins for affected indices.

Key Points

  • TATAMOTORS will be excluded from cross margin benefit constituent lists at end of day October 13, 2025
  • Weightages for other constituents in respective indices will remain unchanged initially
  • Revised index weightages will be published based on TATAMOTORS closing price on October 14, 2025
  • New weightages become effective from begin day October 16, 2025
  • Spread margins temporarily increased from 25% to 30% for BSX, SX50, SX40 and NIFTY Index
  • Members must sync portfolios as per revised weightages by end of day October 15, 2025

Regulatory Changes

This circular implements risk management adjustments in response to the corporate demerger of TATAMOTORS, following the framework established in circular no. 20251007-50 dated October 07, 2025. The changes affect cross margin benefit calculations and spread margin requirements for derivative positions.

Compliance Requirements

  • Members must remove TATAMOTORS from cross margin benefit calculations by end of day October 13, 2025
  • Portfolio synchronization with revised weightages must be completed by end of day October 15, 2025
  • Members must accommodate the increased spread margin requirement (30% vs 25%) for affected indices from October 13-15, 2025
  • Proper margin coverage must be maintained throughout the transition period

Important Dates

  • October 13, 2025 (EOD): TATAMOTORS excluded from cross margin constituents; spread margins increase to 30%
  • October 14, 2025: Revised weightages calculated based on TATAMOTORS closing price
  • October 15, 2025 (EOD): Deadline for members to sync portfolios; spread margins return to 25%
  • October 16, 2025 (Begin Day): Revised weightages become effective

Impact Assessment

Market Impact: The demerger of TATAMOTORS affects cross margin benefits across multiple major indices (BSX, SX50, SX40, NIFTY), potentially impacting margin requirements for derivatives traders with positions in these indices.

Operational Impact: Members have a narrow three-day window to adjust their systems and portfolios. The temporary 5% increase in spread margins (from 25% to 30%) will increase margin requirements during the transition period, potentially affecting liquidity and capital deployment.

Risk Management: The exclusion of TATAMOTORS from cross margin calculations may reduce margin offset benefits for portfolios containing this stock alongside index derivatives, requiring additional margin funding.

Impact Justification

Corporate action affecting cross margin calculations and spread margin requirements for multiple indices, requiring member portfolio adjustments within tight timelines.