SEBON-Collateral Deposit

SEBON has made amendments to Stock Exchange Operational Byelaws, 2075 mandating a clause regarding interest on the collateral deposited to brokers in the agreements between such brokers and investors. As the collateral amount is 25% of the transaction limit allowed to investors, this can mean a large inflow of income to such investors. However, to attract retail investors, a common practice among various brokers is that they only ask for a cheque of the collateral amount which is rarely encashed. In view of the provision for interest payment on collaterals, brokers may divert from this practice and ask for cash collaterals which may discourage some of such retail investors.