Important Changes in view of Short Margin Penalties

Important Changes in view of Short Margin Penalties

Dear Customer,

In view of Margin penalties that are charged by exchange, we have made the following changes in our system in the interest of customers so as to mitigate the cases which results in short/peak margin penalties

1. Changes related to upfront margin collections 

According to the SEBI’s circular, effective from August 1, 2022, all peak margin requirements are calculated based on the Beginning-of-Day margin requirement. Earlier, margin requirements were calculated 5 times in a day & each time margins were updated following the latest span file!

In light of the same, we are updating Intraday span margin files after 2 PM allowing customers sufficient time to maintain the required margins.

The below list of span margin files will be updated (Reference:
  • F&O-Begin day SPAN  
  • F&O-4th Intra-day SPAN 
  • F&O-End of day SPAN 

2. Changes in Order level hedge benefit

In the interest of our clients, to help you get the most out of hedge benefits & prevent you from paying penalties for short margins we have done certain adjustments to our systems.

Hedge Margin Benefits on Multi-Legged Strategies – You can now avail hedge margin benefits on the positions by placing the 2nd leg of the hedge “At Market” to get the order level hedge benefit while trading Option strategies like a straddle, strangle, etc. 

Below is an example of a straddle for your reference

For Example:

Margin Required for executing strategies (at limit price): ₹327121

Post execution margin requirement (at limit price): ₹186754

Margin Required Now for executing strategies (at market price): ₹186754

Post execution margin requirement (at market price): ₹186754

Click here to calculate your strategy margin.

Please Note:
  • Hedge benefits will not be allowed for pending limit orders. It will be only allowed on market orders.
  • You must have at least one order (leg of hedge) executed to get margin benefit while placing a market hedge order.

3. Auto Square-off positions of clients who are in Margin shortfall

We will be constantly observing clients who are coming in shortfall. 
As soon as the client falls in shortfall they will be communicated via SMS/Email the amount of shortfall with a timeline of 30 Mins to make margin availability either by adding shortfall funds into the trading account from a bank account or by squaring off the position.
On failure of a client to clear the shortfall within a stipulated time, our system will automatically square off the client’s position so as to save a client from short-margin penalties.

4. Changes related to the closing of a hedge position (Applicable from Wed, 19th Oct 2022)

We have made changes in our existing system so as to ensure that client does not fall in short margin on hedge position closure 

Our RMS will reject the order if the client is trying to break the hedge by closing the leg which is going to result in a short margin.

The Rejection message shown in such a scenario will be “Order rejected by RMS as Squaring off this position will result in margin shortfall of Rs.11944”

In such case the customer will have to square off the leg which is consuming a higher margin first so as to close the hedge position 

Happy Investing,

Team 5paisa