What is peak margin by SEBI?

Peak Margin is a method for calculating the maximum margin required in the trading account of the client before the client places an order in the Cash and Derivatives segments. The broking company must collect the required margin from the clients. Otherwise, Sebi will impose a penalty for non-adherence. Since September 2021, clients have to maintain a 100% peak margin. This rule has been brought in by Sebi to protect traders from being over-leveraged.

The exchange will take four snapshots of trade in a day and consider the maximum margin out of the four as peak margins. This is the margin that the client will have to maintain with the broker at all times. If anyone fails to adhere to the requirement laid down by the regulator, then steep penalties are levied for non-adherence.