Changes in Trading Margin as Per Regulatory Requirements – September 2020

The SEBI Circular dated November 19, 2019 which comes into effect from September 2020 has introduced many changes which will affect the day to day trading practices. At Samco, the margin changes is effective from Monday, 14th September 2020.

Intraday Profits not counted as margins for new positions: Earlier, Intraday profits in both Cash & Derivative segments were allowed to be used for creating new positions on the same trading day and later days as well. However, post the introduction of the above-mentioned circular, Realized Intraday Profits will be counted as margins only after the settlement date i.e. (Trade) T+1 day for Derivative Segment and T+2 days for Equity Segment.

Example : If you trade in Nifty Future and are able to generate an Intraday profit of Rs.10,000/-. This intraday profit will be blocked for the same trading day and can be used from the next trading date i.e. T+1 day.

Similarly, an Intraday Profit of Rs 10,000 generated by trading in equity shares on Monday will be blocked for Monday & Tuesday as well. It can be used only from T+2 day i.e. Wednesday.

Premium realized on Options Selling can be used only for Buying new Option on the same day – When you sell any Carry Forward Buy (Long) Option Position or Write (short) Options, the premium realized can only be used for buying or creating new long option position only on the same Trading (T) day. From next day it can used as free margins for any other trades.

Example: Suppose you Sell a Carry Forward Option Position of 20 Lots Nifty 11500 Call bought few days ago for Rs.100. It will result in a premium receipt of Rs.1,50,000/-(75*100*20). This premium receipt can be utilized to Buy options in Equity F&O segment only & not for any other type of transaction. If your opening cash balance is zero, you can buy say Nifty Puts worth Rs 1,50,000/- value, but if you want to trade in Nifty Future 1 lot having margin requirement of approx. Rs. 145000/-, the order will get rejected.

Sale of T1 Holdings (BTST)

CNC Order Type – When you sell the shares as Buy Today Sell Tomorrow (BTST), you do not have clear holdings in your demat account and the same is recorded as T1 Holdings. On sale of such unclear (T1) holdings, 40% of the Sale Value will be blocked on the Trade Day.

Example: Suppose you have purchased SBIN Qty 500 yesterday and sold the same today at Rs.200/-. Out of the sale value of Rs.100000/-, 40% amount will be blocked for the day and the balance 60% i.e.Rs.60000/-will be available for other trades.

BTPT Order Type – While buying shares under the order type BTPT, unlike CNC, you have to pay only a margin amount and not the whole trade value. When the same shares are sold on the next day, the entire margin amount realized will be blocked for trading on the Trade Day.

Example: Suppose you have purchased SBIN Qty 500 yesterday in BTPT (having 40% Margin) and sold the same today at Rs.200/-. The margin realized of Rs.40000/- (40% of sale value Rs. 100000/-) will be blocked and not allowed to be used towards any transaction for the day.

Thus, the updated Margin rules are as follows:

No. Margin Type Trade Date Next Day (T+1 Day) T+2 day Onwards
1 Premium on CF Option Sale or Writing Realized Premium cannot be used for Stock Purchases or Fresh F&O Positions. It can be used only for Buying Options In the same segment. Realized Premium can be used for all type of trades. Realized Premium can be used for all types of trades.
2 BTST (T1)- CNC Sell 40% of the Realized Sale Value cannot be used for Stock Purchases or Fresh F&O Positions. Realized Sale Value can be used for all types of trades. Realized Sale Value can be used for all types of trades.
3 BTPT Sell Realized Margin Amount cannot be used for Stock Purchases or Fresh F&O Positions. Realized Margin Amount can be used for all types of trades. Realized Margin Amount can be used for all types of trades.
4 Intraday Profits – Cash Segment Realized Profits cannot be used for Stock Purchases or Fresh F&O Positions. Realized Profits cannot be used for Stock Purchases or Fresh F&O Positions. Realized Profits can be used for all types of trades.
5 Intraday Profits – F&O Segment Realized Profits cannot be used for Stock Purchases or Fresh F&O Positions. Realized Profits can be used for all types of trades. Realized Profits can be used for all types of trades.

 

Any Stock purchases or fresh F&O position taken against above margins till the time it is realized i.e. on the trading day or the next day will result in Margin Shortfall and Margin Penalty from the exchanges.

Kindly trade only up to the opening balance available in the ledger.

As a precautionary measure, SAMCO will block the realized intraday cash segment profits of the trade date under the head “Notional Cash” on the next day i.e. T+1 day. So please don’t worry, the margin would be available for Trading from T+2 day.

Due to the above regulatory changes, it may happen that you might see the margin available while entering orders but the orders will get rejected due to the above blocking.

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