Modified Carry Forward System (MCFS)
Summary
SEBI mandates a Modified Carry Forward System (MCFS) for secondary market transactions based on Risk Management Group recommendations. The Incremental Carry Forward Margin (ICFM) is levied as a combination of slabs based on percentage and absolute outstanding positions in a scrip. Stock Exchanges are advised to implement these margin collection decisions immediately.
Text
The Incremental Carry Forward Margin as prescribed by SEBI vide its Circular 19 dated July 2, 1999 will now be charged as a combination of slabs based on percentage (of total number of shares paid up) and absolute outstanding market-wide carry forward position in a scrip.
Accordingly, in case the carry forward gross position in any exchange, in any scrip, exceeds the parameters mentioned below, the ICFM shall be levied, in addition to the carry forward margin, at a rate which is higher of the rates determined as per the tables below : Gross Outstanding Market Position (Rs. In crores) Exceeding 75 and up to 100 Rate of Margin 5% ... Exceeding 400 Rate of Margin 30%
Once this margin is imposed by any Exchange having ALBM or MCFS facility, the other Exchanges having ALBM or MCFS will also follow the same from the start of next settlement.
Mark to Market Margin shall be collected separately from daily/exposure margin as the purpose of these margins is different.
The Carry Forward Margin in respect of positions carried forward would be paid 100% in cash or fixed deposits or government securities, or a combination of three.
The Stock Exchanges are advised to implement these decisions immediately.
Source: SecMarx — Modified Carry Forward System (MCFS). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.