As with virtually all photographic plate material, the astrograph plates from which the Southern Proper Motion (SPM) catalog is being compiled suffer from magnitude-dependent systematic shifts in the image positions, i.e., a magnitude equation. If left uncorrected, these would adversely affect both the primary goals of the SPM catalog, the absolute proper motions, and the faint secondary reference frame. Using the diffraction-grating images present on the plates, a procedure is adopted that allows a spatially variant magnitude equation correction to be derived individually for each SPM plate. Application of the method to ~120 SPM fields, primarily around the south Galactic pole and the -30 deg and -35 deg declination zones, demonstrates its effectiveness. Indeed, the method proves superior, in the case of the SPM, to a direct calibration of the magnitude equation using the newly available Tycho Catalogue. The result of the diffraction-grating technique is final SPM positions and proper motions that are largely magnitude equation-free, as verified by numerous internal and external checks.