Markets regulator Sebi on Monday came up with new guidelines for stock brokers with regard to entering risk-reduction mode, as part of efforts to bolster their risk management capabilities.

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The Securities and Exchange Board of India (Sebi) said in a circular the decision has been taken after consultation with various stakeholders.

The criteria for entering the risk-reduction mode for brokers with regard to operationalisation of the interoperability among clearing corporations has been revised.

"... stock brokers shall mandatorily put in risk-reduction mode when 90 perent of the stock broker's collateral available for adjustment against margins gets utilised on account of trades that fall under the margining system," Sebi said.

Sebi has asked stock exchanges and clearing corporations to put in place requisite infrastructure and systems for implementation of the new framework.

Interoperability permits trading members to clear trades through a firm of their choice instead of going through the clearing corporations owned by the bourse on which the trade was executed.

(With PTI inputs)

First Published:Mar 23, 2020 8:26 PM IST