ANMI Requests SEBI To Keep RBI’s 100% Cash Collateral Rule in Abeyance

The Association of National Exchanges Members of India (ANMI) has requested the Securities and Exchange Board of India to keep the Reserve Bank of India’s recent amendment on bank guarantee collateral requirements in abeyance. The submission was made on February 18, 2026, in response to the RBI circular issued on February 13, 2026.

The industry body has stated that the rule may have unintended consequences for capital market functioning. It has also emphasised the likely implications for market liquidity, trading costs, and foreign investor interest.

ANMI Flags Concerns Over RBI’s February 13 Circular

ANMI has highlighted that the RBI circular requires 100% cash collateral for bank guarantee facilities extended to Capital Market Intermediaries engaged in proprietary trading. The association noted that this represents an increase from the previous 50% collateral requirement.

It stated that the directive may constrain access to banking finance for proprietary trading firms that depend on bank guarantees to support market operations. ANMI emphasised that these changes could affect market depth, widen bid‑ask spreads, and raise transaction costs for end investors.

Role Of Proprietary Trading Firms in Market Structure

Proprietary trading firms are typically well‑capitalised and regulated equity brokers that contribute substantially to market‑making and arbitrage. These firms facilitate efficient price discovery through continuous participation across trading sessions.

ANMI argues that reduced access to bank‑backed guarantees may affect their ability to maintain liquidity provision. The association believes this could result in more volatile spreads and lower intraday participation across market segments.

Impact On Foreign Portfolio Investors and Competitiveness

ANMI has warned that lower liquidity and higher execution costs could make Indian markets less attractive for Foreign Portfolio Investors. The association added that reduced market depth may discourage overseas participants seeking efficient trade execution.

It also noted that foreign entities may have an advantage since they can meet margin obligations using standby letters of credit supported by overseas banks. According to ANMI, such differences may create an uneven competitive landscape between domestic intermediaries and foreign players.

Industry Data and Historical Performance of CMIs

In its submission, ANMI pointed out that the capital market intermediary segment has historically exhibited a near‑zero level of non‑performing assets. It referenced industry data showing approximately ₹1.20 lakh crore worth of outstanding bank guarantees across exchanges.

The association noted that banks have not invoked these guarantees even during major periods of global volatility, such as the 2008 financial crisis or the COVID‑19 turmoil. ANMI believes this track record demonstrates that the segment maintains a strong credit profile despite market fluctuations.

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Conclusion

ANMI’s request to SEBI reflects concerns over the potential market‑wide impact of RBI’s amended collateral norms. The industry body has highlighted possible challenges for proprietary trading firms, market liquidity, and the competitive balance between domestic and foreign participants.

It has also provided historical evidence to demonstrate the strong credit performance of the segment. The matter now awaits further regulatory consideration as stakeholders assess the implications of the February 13, 2026, amendment.

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