Shares of Multi Commodity Exchange of India Ltd. (MCX) declined sharply by more than 5% in early trade after the Reserve Bank of India (RBI) announced tighter norms governing bank lending to capital market intermediaries. The revised framework will come into effect from April 1, 2026.
Under the new guidelines, banks will be required to ensure that all credit facilities extended to brokers, clearing members and other securities firms are fully backed by eligible collateral. The norms also mandate stricter monitoring of such exposures, potentially altering how short-term funding lines are structured across the capital markets ecosystem.
The move is expected to impact entities that rely heavily on short-term credit for settlement obligations, margin funding and market-making activities. Market participants are closely assessing the potential implications for exchanges, brokerage firms and clearing corporations.
According to comments made by Dhiraj Relli, MD and CEO of HDFC Securities, futures and options (F&O) volumes could decline by 15–20% from April 1. He noted that proprietary trading accounts for nearly 40% of F&O volumes, suggesting that tighter funding conditions could materially affect trading activity.
Global brokerage Citi said the RBI’s draft guidelines may lead to moderation in overall trading activity, particularly in select cohorts such as proprietary trading desks. However, the firm added that it is premature to assess the full profit and loss impact at this stage. Citi further indicated that transaction-based plays, including brokers, clearing members and exchanges, are likely to feel the impact if trading volumes slow.