MARGIN POLICY
Margin in trading do excites us a lot to trade more and more. Actually margins are in accordance with the market dynamics and may change from time to time. Below mentioned are some of the points which depict the various margin policies of Ashlar. These will help you out while trading in various segments. Let’s have a look at them:
1. Equity Trading
ASHLAR provides you with an opportunity to trade in both NSE and BSE segment. These are the details for exposure in Intraday and Delivery trading:
Intraday: Basically it involves opening and closing on the same day itself. In this segment, ASHLAR is providing leverage up to 10 times in Equity. Basically you need to place orders with the product types MIS/MISS/BO/CO. The leverages provided here are as per the brokerage plan selected by you and the segment of the stock you want to trade in.
Delivery:
Delivery trading involves holding stocks overnight. Here in this section, you can expect to have leveraged up to 4 times in Equity.
The leverages are provided as per the brokerage plan selected by you and the category of stock you are trading in.
You can have a look at our Margin Calculator for leverage in Equity segment here.
2. Future & Option Trading (Equity Stocks and Index)
Intraday
ASHLAR is providing leverage up to 2X in Future Contracts in Bracket Order (BO) and Cover Order (CO), and up to 2Xin Margin Intraday Square-Off (MIS)/MISS, depending upon the brokerage plan chosen by you.
Whereas, in Option Writing/Selling up to2Xleverage is provided in Margin Intraday Square-Off (MIS)/MISS, depending upon the brokerage plan chosen by you.
In Option buying, up to 2 times leverage is available in Bracket Order (BO).
Carry Forward
According to the various guidelines mentioned by the exchanges, the full margin, known as the span margin or initial margin plus exposure margin will be required to take overnight position or to carry forward the position till expiry. You need to maintain the stipulated margin as per the exchange on daily basis, to avoid any penalties for short fall.
The orders have to be placed in product type NRML.
You can check our Margin Calculator for leverage in Futures and Options segment here.
3. Future & Option Trading (Currency)
Intraday
We are providing up to 2 times leverage in currency futures and option writing, as per the brokerage plan selected by the client.
The leverages will be available in the product type MIS/MISS.
Carry Forward
As per exchange’s guidelines, the full margin, which is span margin or initial margin plus exposure margin will be required to take overnight position or to carry the position till expiry. The client needs to maintain the stipulated margin as per the exchange on daily basis, to avoid any penalties for short fall.
The orders have to be placed in product type NRML.
You can check our Margin Calculator for leverage Currency segment here.
4. Future & Option Trading (Commodity)
Intraday
Here you will get leverage up to 2 times in commodity futures and option writing. The leverage basically depends on the brokerage plan selected by you.
Carry Forward
As per exchange’s guidelines, the full margin, which is span margin or initial margin plus exposure margin will be required to take overnight position or to carry the position till expiry. The client needs to maintain the stipulated margin as per the exchange on daily basis to avoid any penalties for short fall.
The orders have to be placed in product type NRML.
You can check our Margin Calculator for leverage Commodity segment here.
Margin limit will be changed according to SEBI circularSEBI/HO/MRD2/DCAP/CIR/P/2020/127 dated July 20, 2020.
5. IMPORTANT
Margin of Safety:
The client has to maintain Margin of Safety/upfront margin, in case of equity delivery. The non-maintenance of the same will lead to squaring off the position/holding automatically by the RMS Team, without the requirement of margin call.
The same is done to maintain risk in case of volatility in the market or in the particular stock taken by the client.
*Margin of safety = (Net Cash Available *100)/ Total Pledged Holdings after Haircut
Net Cash Available =Value of pledged shares after haircut – Debit in Ledger
Margin reporting and Margin Pledge
There are three major regulatory changes after Sep 1st, 2020:
o The method of pledging stocks, and
o Upfront margin requirements (Stocks and F&O on NSE, BSE, MCX)
o Peak Margin requirement
New pledging system
Until now, when you pledged stocks as collateral to receive margins for trading, you had to move it from your Demat account to the broker and in turn to the clearing corporation. Going forward, the stock will continue to remain in your Demat account and can be directly pledged to the clearing corporation. In the new process of PLEDGE, you will get OTP SMS from NSDL/CDSL. The process of pledge will be completed only after confirming the OTP and only then the shares will be pledged and margin benefit against shares will be given.
And for releasing the shares you have to place a upfront request with broker before selling them so that releasing request can further be placed with CM/CC. if request is not placed on time and auction happens then you will have to bear the loss.
Holdings sold can be used to trade F&O
As it is now, you will be able to sell your stock holdings and use the proceeds to enter F&O trades immediately. This is again possible after the clarification from exchanges that Early Pay in (EPI) of stocks sold can be considered as margin, both for new stock and F&O trades.
Sale proceeds from holdings can be used to take new positions
If we debit shares from your Demat and make an early pay in to the exchange on the day it is sold you can continue using the full value of sale proceeds from your stock holdings as soon as you exit them to enter new positions — other stocks or F&O positions. Nothing will change for you as a client
T1 holdings
To sell T1 holdings (stocks bought the previous day and yet to be credited to your Demat) you need VAR, ELM, ADHOC margin. Credit for sell will not be available against T1 selling.
Intraday profits can be used for new positions only after it is settled
Currently, you can use intraday realized profits for taking new positions on the same trading day. Going forward, you will be able to use it only after 2 days in case of equity/stocks and the next day in case of F&O. This is because the settlement cycle for equity is 2 days and 1 day for F&O, which is when the profits get credited to your account from the exchange only then. So intraday equity profits earned on a Monday can be used to trade more only on Wednesday, and intraday F&O profits earned on Monday can be used to trade more only on Tuesday.
Option sell credit can be used only to buy options on the same trading day
When you exit your long/buy option positions or enter new write/short options, the proceeds or credit of option premium can be used for only new long/buy option trades on the same trading day and only within the same segment (proceeds from equity options can’t be used for currency or vice versa). You can use this proceeds or option credit for all other types of trades only from the next trading day.
Intraday leverages for now remain the way it was before.
|
Summary of the changes in the below table: |
|
|
|
Action |
Till 31st August 2020 |
From 1st September 2020 |
|
Stocks sold from Demat holdings |
Can use proceeds to buy other stocks or trade in F&O |
No change since we debit stocks the same day and give them to the exchange under the early pay-in(Best Effort basis) mechanism |
|
Stocks sold from T1 holdings (i.e. BTST) |
Can use proceeds to buy other stocks or trade in F&O |
Require Upfront margin to sell T1 (BTST) holding and you cannot use the Credit for sell proceeds to buy other stocks |
|
Intraday profits earned |
Can use proceeds to buy stocks or trade in F&O on the same day |
Cannot use the earnings until settled by the Exchanges i.e. T+1 for F&O and T+2 for Equity |
|
Options sold |
Can use proceeds to buy stocks and trade in either currency or equity F&O on same day |
Can use proceeds only to buy options in the same segment i.e. option sell credit for stock options cannot be used to buy currency options. |
*Note: Intraday square off timings can change based on the discretion of our risk management department.
A Call & Trade charge of ₹20 + GST will be applicable for all positions squared off by our RMS desk, including auto square off.
If any intraday position or an MIS trade is not squared off on the same day due to any link or system failure or any risks associated with internet/wireless based trading which may occur at the end of the Client, Ashlar or the respective Exchange, it shall be treated as a Cash and Carry ("CNC") or NRML position and carried forward to the next trading day. In case of such a situation arising, the onus of squaring off the position will be on the Client. Our RMS desk shall square off any such position, without the requirement of a margin call, if the necessary cash is not available in the Client's account.
All information mentioned here is subject to change at the discretion of our Risk management team.
* Limits can be changed without any prior notice by risk management department in case of expected market volatility.
Note
Risks pertaining to commodity options that devolves into futures on expiry:
• All open options contract will be devolved into futures on the expiry date of the options contract.
• The exchange blocks a margin equivalent to 25% of the margin required to hold the devolved future contract 2 days before expiry and 50% of the margin, 1 day before expiry.
• Failure to produce the margin in the trading account can lead to a square-off of open positions at the discretion of the RMS team.
• The margin block will be applicable for contracts part of the exchange’s sensitivity report.
• ASHLAR may also consider imposing additional margins apart from the ones described above from time to time.
If any intraday position or an MIS/MISS trade is not squared off on the same day due to any link or system failure or any risks associated with internet/wireless based trading which may occur at the end of the Client, Ashlar or the respective Exchange, it shall be treated as a Cash and Carry ("CNC") or NRML position and carried forward to the next trading day. In case of such a situation arising, the onus of squaring off the position will be on the Client. Our RMS desk shall square off any such position, without the requirement of a margin call, if the necessary cash is not available in the Client's account.
• An order placement charge of Rs.20 plus GST will be levied for all OFS, Buyback and Takeover orders placed through Ashlar.
• Option premium received from writing options will not be considered as Cash/Capital.
• BO/CO not available on currency options.
• BO/CO Order is not available for stock options.
• Positions which do not have sufficient funds can be cut any time at the discretion of our RMS desk. There will be no margin calls or intimation from our RMS desk.
• Any open positions can be squared off at the discretion of our RMS desk if the funds available in your account are short of exchange specified margins. There will be no margin call before the position is squared off. During times of extreme volatility, the loss could be more than the funds available in your account before the position is squared off. All resulting charges or debts that might occur from such square offs will have to be borne by the client.
• Collateral margin will not be considered for equity delivery positions.
• All BO, CO and MIS/MISS positions will automatically be squared off at the end of the each trading day.
• Trading in MCX contracts will be banned a day prior to the delivery intention period.
• Basket /Cover/MIS orders will only allowed in Future listed stocks.
• Fines levied by the exchange for short margin will be payable by the client.
• Clients will have to ensure all CO, MiS/MISS, and intraday products are closed by the EOD.
• Payments will only be accepted from the client’s registered bank account; cash and DD pay-in are not accepted.
• Commodities with staggered delivery will be closed 10 days prior to the delivery date in order to avoid physical delivery, also commodities with compulsory delivery will be closed a day before their respective delivery intention periods.
• On the start of the delivery intention period, clients will not be informed before closing any open positions to avoid compulsory delivery notice. Clients are advised to close their positions well in advance.
• For Commodities, on the start of the delivery intention period, no contract will be available under MIS/MISS or CO product type.
• Physical Delivery of Commodities is not allowed.
Collateral margins
• For all pledge requests placed before 4:00 PM, the collateral margin will be available to trade on T+1 day (next working day). All requests placed after 4:00 PM will be processed only on the next working day.
• Margins will be provided after the applicable haircut. A haircut of 20% would mean that if you pledged stocks worth Rs 1 lakh, Rs 80,000 (80% of 1 lakh) will be added as collateral margin to your trading account.
• You will be able to use this entire margin after a haircut for taking intraday or overnight positions in Futures, and for writing Options of equities, indices, and currencies.
• Exchanges stipulate that for overnight F&O positions, 50% of the margin needs to compulsorily come in cash and the remaining 50% can be in terms of collateral margin. If you don’t have enough cash, your account will be in debit balance and delayed payment (interest) charges will be applicable on the debit amount. So, if you take a position that requires a margin of Rs 1 lakh, you will need at least Rs 50,000 in cash irrespective of how much collateral margin you have. Assuming you don’t have Rs 50,000, whatever you are short by will be the debit balance for the day, and delayed payment (interest) charges will be applicable for that amount.
• Reserves the right to liquidate any stock in case debit arises in the client's account and subsequent nonpayment of such debits.
All information mentioned here is subject to change at the discretion of our Risk management team.
