What is Delivery Margin on Physical Settlement?

What is Delivery Margin on Physical Settlement?

The stocks that have been identified for physical settlement would attract the delivery margin as is currently being done in the Capital market segment. These margins will be part of the initial margin that would be additionally collected by the clearing member.

In case of ITM long options (put and call), the delivery margin would be levied 4 days before the expiry day i.e. preceding Friday of the expiry week.

The delivery margin would be released once the physical settlement process is completed.
Note: There would be no assignment margins for the assigned option stocks identified for physical settlement.




    • Related Articles

    • What is the concept of Physical Settlement in Equity Derivatives?

      The concept of physical settlement in equity derivatives was introduced by SEBI in July 2018 and made mandatory from October 2019 expiry onwards all the stocks. F&O physical settlement was introduced because Indian derivatives markets are one of the ...

    • What is 5Paisa's policy on the physical settlement of equity derivatives on expiry?

      As F&O contracts approach their expiry date, the margins required for these contracts increase to align with the contract value. This is because physical settlement involves the actual delivery of the underlying stock, necessitating higher margins to ...

    • How to place request for physical delivery of Futures and Option position?

      Requesting physical delivery of Futures and Option positions involves following a structured process within the trading application. Here's a step-by-step guide: 1. Open the 5paisa Mobile App. 2. From the menu, select “Books.” 3. Choose “Position” ...

    • Why is higher than usual margin blocked for my F&O trades close to expiry?

      Higher than usual margin is blocked for Futures and Options (F&O) trades close to expiry due to the nature of physical delivery associated with these contracts. As F&O contracts approach their expiry date, the margins required for these contracts ...

    • What is physical delivery?

      Understanding Physical Delivery in Derivatives Trading Physical delivery refers to the actual transfer of the underlying asset—such as stocks, commodities, or bonds—when an options or futures contract reaches its expiration. Unlike cash settlement, ...