CDS may impose a margin on all Participants, with reference to the securities traded on equity market of the CSE, on each Trade day, except on the following trades;
- (i) A sell Trade which does not result in a Short Position;
- (ii) An Excluded Crossing; and
- (iii) A Trade carried out on the Buy-in Board of the CSE.
Total margin requirement will be as follows;
- (i) Base margin requirement; and
- (ii) Additional margin requirements (where applicable).
Base Margin Requirement
Each Participant shall at all times maintain collateral to satisfy the base margin requirement determined by the CDS from time to time as more fully set out in the CDS rules. Base margin requirement is computed based on the quarterly average daily purchase turnover of each participant. Participants should maintain collateral to satisfy this base margin requirements in the preceding calendar quarter.
Additional Margin Requirement
When the base margin requirement is insufficient to satisfy the total margin requirement of a participant in respect of trades on a particular day, the CDS will impose additional margin requirements. This will be communicated to the relevant participant at the end of each Trade Day (T)
The additional margin requirements is comprised of the:
- i. Initial margin requirement; and,
- ii. Variation margin requirement;
and will be computed based on the methodology determined by the CDS from time to time and notified to the Participants.
Form of Collateral
CDS Participants can furnish collateral to the CDS in the form of cash and/or an irrevocable and unconditional bank guarantee obtained from a commercial bank licensed by the Central Bank of Sri Lanka, acceptable to the CDS.
You may find out more details by reading the Rules applicable for Margins & Collateral from CDS Rules Section 9 and from DETERMINATION OF BASE MARGIN REQUIREMENT AND MARGIN METHODOLOGY
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