ANMI Urges SEBI to Delay RBI's 100% Bank Guarantee Rule by 6 Months

The Association of National Exchanges Members of India (ANMI) has requested SEBI to keep in abeyance the RBI amendment mandating 100% cash collateral for bank guarantees issued to capital market intermediaries engaged in proprietary trading. 

ANMI Seeks 6 Month Deferment of RBI Amendment 

The Association of National Exchanges Members of India submitted a representation dated February 18, 2026, urging the Securities and Exchange Board of India to defer implementation of the Reserve Bank of India circular dated February 13, 2026.  

The amendment requires banks to maintain 100% cash collateral for bank guarantee facilities extended to capital market intermediaries involved in proprietary trading, up from the earlier 50% requirement. 

ANMI stated that while the measure aims to strengthen prudential norms, it could lead to unintended consequences for market liquidity and depth. 

Concerns Over Liquidity and Foreign Participation 

Proprietary trading firms contribute to market making, arbitrage, and price discovery. ANMI indicated that raising collateral requirements from 50% to 100% may restrict banking finance access, potentially widening bid ask spreads and increasing transaction costs for investors. 

The association also highlighted possible implications for Foreign Portfolio Investors, noting that reduced liquidity and higher costs could affect participation.  

It further pointed out that foreign entities may utilise standby letters of credit backed by overseas banks, creating competitive differences. 

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Credit Profile and International Example 

ANMI noted that the capital market intermediary segment has historically shown near zero non performing assets.  

Approximately ₹1,20,000 crore in bank guarantees are currently outstanding across exchanges, with no reported invocation even during periods such as the 2008 financial crisis and the COVID 19 volatility phase. 

The association cited South Korea’s 2011 changes in the KOSPI 200 options market, where higher trading costs and deposit requirements reportedly led to a decline in liquidity. 

Collateral Impact and Consultation Request 

ANMI estimated that the proposed change would reduce overall collateral by around ₹22,500 crore, representing roughly 2.5% of total exchange collateral. It requested a 6-month deferment to allow stakeholder consultation and impact assessment. 

Conclusion 

The request seeks temporary suspension of the RBI’s 100% cash collateral requirement for bank guarantees issued to capital market intermediaries. The industry body has highlighted liquidity, participation, and competitive considerations while calling for further consultation before implementation. 

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