2/6/2018 Stock exchanges may call for early margin if sell-off intensifies

Stock exchanges may call for early margin if sell-off

intensifies

Brokers normally have to deposit margin money with the

exchanges at 12 noon. In case the exchanges feel the market
condition could worsen, they may call for margin funds ahead
earlier than that

Tarun Sharma

Stock exchanges may call for early margin funds if the sell-off in the market intensifies, sources told
Moneycontrol. Global markets are in turmoil following the 1200-plus point fall in the Dow Jones on
Monday. Asian markets are down 3-5 percent and Nifty futures on the Singapore Exchange are down
around 330 points (3 percent), pointing to a similar slide in India when the market opens for trading.

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Stock exchanges collect a margin on outstanding positions as a risk management measure. The amount
varies depending on the risk perception of the exchange on a particular stock/derivative or on the market
as a whole.

The stocks which have a history of sharp moves on either side are subject to higher margins compared

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2/6/2018 Stock exchanges may call for early margin if sell-off intensifies

to those which are comparatively more steady.

Ahead of the Budget, the stock exchanges had raised margin requirements by 18 to 20 percent on
futures and options contracts. This was done to curb excess leveraged positions in the market. Today
exchanges may call for early margins from large brokers who have huge outstanding positions in the
market . An exchange official told Moneycontrol: “We have been collecting adequate margins and so
there is no fear of default by any broker. However, we may call early margin if we will see any major fall in
the market”.

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Brokers normally have to deposit margin money with the exchanges at 12 noon. In case the exchanges
feel the market condition could worsen, they may call for margin funds ahead earlier than that.
Feb 06, 2018 09:17 AM IST | Source: PTI

Maldives' top judge arrested as state of emergency declared

The detention of Chief Justice Abdulla Saeed and another

Supreme Court judge raised the stakes in a dramatic clash after
Yameen refused to comply with an order to release nine political
dissidents.

PTI
The Maldives' top judge was arrested today as security forces stormed the Supreme Court at dawn, in a
deepening confrontation with President Abdulla Yameen who has declared a state of emergency in the
troubled honeymoon islands.

The detention of Chief Justice Abdulla Saeed and another Supreme Court judge raised the stakes in a
dramatic clash after Yameen refused to comply with an order to release nine political dissidents.

Police said both men were under investigation for corruption and that the court's top administrator had
also been detained.

Yameen has presided over an escalating crackdown on dissent that has battered the image of the
upmarket holiday paradise, and left almost all the political opposition jailed since he came to power in
2013.

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Yesterday he even ordered the arrest of his estranged half-brother and former president Maumoon
Abdul Gayoom, who had sided with the main opposition.
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The 80-year-old -- president for 30 years until the country's first democratic elections in 2008 -- was
taken from his home in the capital Male around midnight on Monday, according to a tweet from his
daughter Yumna Maumoon.

"I have not done anything to be arrested," Gayoom said in a video message to supporters posted on
Twitter.

"I urge you to remain steadfast in your resolve too. We will not give up on the reform work we are doing."

Heavily armed troops and police special operations units stormed the Supreme Court in the early hours,
the court said on Twitter, as police used pepper spray to disperse hundreds of people gathered outside.

The court's shock move in support of the political dissidents on Thursday also included an order for the
government to restore the seats of 12 legislators sacked for defecting from Yameen's party.

The opposition now has the majority in the assembly -- meaning they could potentially impeach the
president.

But the government, which has ordered police and troops to resist any attempt to arrest or impeach
Yameen, said the court was not above the law.

"The Supreme Court ruling stands in defiance of the highest authority in the country: the constitution,"
spokesman Ibrahim Hussain Shihab said in a statement.

"The Supreme Court must remember that it too is bound by law."

He said the government would "facilitate calm" and ensure the safety of all citizens and tourists
"throughout this unusual period".

The court's decision also paved the way for exiled former president Mohamed Nasheed -- the nation's
first democratically elected leader who was controversially convicted of terrorism in 2015 -- to run for
president this year.

Yameen, who has faced several unsuccessful opposition attempts to impeach him for alleged corruption,
responded by shuttering parliament and on Monday his administration announced a 15-day state of
emergency.

"The reason for the declaration is that the Supreme Court's ruling was obstructing the functioning of the
government," presidential aide Azima Shukoor said on national television.

The declaration gives sweeping powers to security forces to arrest and detain individuals, curtails the
powers of the judiciary and bars parliament from impeaching Yameen.

But it must be officially conveyed to parliament within two days, according to officials.
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Nasheed, who has expressed fears of unrest, said the declaration amounted to martial law, while an
opposition legislator called it a "desperate move".

"(This) is tantamount to a declaration of martial law in the Maldives," Nasheed said, urging regional super
power India to intervene.

Opposition legislators have also called on the international community to pressure Yameen.
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"Suddenly, inflation has become one of the most-talked about issues in markets," U.S. bank J.P. Morgan
said in a note to clients.

However, the correction in oil is more than a reaction to a sell-off in financial markets.

Despite efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to
withhold production since January last year in order to tighten the market and prop up prices, crude
supplies remain relatively ample.

That's largely due to soaring U.S. oil production, which has jumped by almost 18 percent since mid-2016
to 10 million barrels per day (bpd) - surpassing output by leading exporter Saudi Arabia.

Only Russia produces more, averaging 10.98 million bpd in 2017.

What's more, there are indications that U.S. oil production will rise further: the amount of rigs drilling for
oil fields rose to 765 by late January, easily more than double the 316 that were in operation during
2016's production lull.

There is also a seasonal downturn to demand, as many refineries shut down for maintenance following
the upcoming end to the peak consumption winter heating season in the northern hemisphere.

The largest U.S. refinery, Motiva Enterprises' 603,000 bpd Port Arthur facility in Texas, began a planned
one-month overhaul on Monday of its key crude oil processing unit.

Consequently, hedge fund managers have cut their bullish exposure to petroleum for the first time in six
weeks.
The Indian rupee plunged 29 paise in the early trade. It opened at 64.35 per dollar as against previous
close 64.06 yesterday.

Rupee is trading at lowest level since December 18.

Bhaskar Panda of HDFC Bank said, "The dollar index has a relatively better day riding on higher than
expected US non-farm payroll numbers."

"The USD-INR was under pressure for a combination of factors which includes dollar strength, Union
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Budget, higher crude prices etc. I expect the USD-INR to trade in a range of 64.05-64.25 for the day."

"Globally, bond yields have moved up. The 10-year benchmark bond yield has been hardening on the
premise of sticky higher retail inflation. I expect this trend to continue towards 7.75 percent from current
7.605 percent gradually," he added.

The dollar gained against a basket of currencies as the US bond yields rallied on safe-haven demand
stemming from a dramatic selloff on Wall Street.

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