Square off Process

Square off Process

Risk team can initiate square off in 9 scenarios. All scenarios are explained below:

Scenario.1. T+6 Debit Square Off  (Daily 3.15 pm)
 
T+6 (T being Trading Day) square off is initiated for all clients who have purchased NON-APPROVED Stocks. All stocks which are categorized as E, A, B, C & D are approved stocks. All other stocks are categorized as NON APPROVED stocks. Any debit balance arising because of purchase in Non-Approved stocks will be square off on 6th Working day from the date of purchase. Clients who have not opted MTF facility for them square off is initiated on T+6 days who have purchased APPROVED and NON-APPROVED stocks. Square off happens only  on Weekdays and working Days.
 
Exceptions to Block and Sell selling are given below:
  1. In case debit is less than 1000
 Scenario.2. T+90 Debit Square off (Daily 3pm onwards)
 
5Paisa Risk team initiates selling for outstanding debit balance for more than 90 days. If a Client is continuously in Debit balance for 90 Calendar days, then on 91st day risk team will initiate square off. The square off will be done only up to the debit balance. Risk team has the discretion to select the stocks which can be sold. T+90 (T being Trading Day) is applicable for all customers who have debit balance for more than 90 days. 

Exceptions to Block and Sell selling are given below.
  1. In case debit is less than 1000
Scenario.3. Risk Based Square off (Daily 9.15 a.m. onwards)

Risk Team will initiate square off of debit balance for all customers where GHVC (Gross Holding Value Cover) is <20%. Please note, w.e.f. April 01, 2022 the below slabs for liquidation are implemented:

GHVC %
Threshold Of Liquidation
1%-17%
Liquidation upto 100% of the outstanding debit balance is initiated
18%-20%
Liquidation upto 75% of the outstanding debit balance is initiated

Gross Holding Value is the value of your Holdings excluding Z Category Stocks. A customer can check his GHVC % in the mobile App or Trade Station Web in Funds Section.

Note: In case the debit balance is because of margin shortage in derivative segment then square off will be initiated to the extent of margin shortage.  

Scenario.4. DPR based Square Off – (Anytime during the Day)
 
Exchange prescribes Daily Price Range (DPR) for most of the stocks. If the client has taken a short position in any of these stocks and the stock is nearing its upper threshold of the DPR range, then the risk team will square off the position only for that stock to the extent of Quantity short sold. Threshold for Square off in the case of DPR is given below:
  1. 4%Tier (for Scrips with 5% Circuit)
  2. 8% Tier (for Scrips with 10% Circuit)
  3. 16%Tier (for Scrips with 20% Circuit)
 Note: Only stocks Sold as Intraday will be considered for Square off. Stocks sold from Holding will be excluded.

Scenario.5. Intraday Square off (Daily 3.20 pm onwards)*
  1. All positions (Cash and derivatives) which are created as an INTRADAY product will be squared off after 3.20 pm. This includes all types of Intraday products i.e. Cover Orders, Bracket Order and Stop Loss Orders.
  2. Every day at 3.19 pm the system shall automatically stop allowing any further intraday order. Our Risk Management system first removes all pending orders and then squares off all Intraday Orders. Customers can view all their squared off orders on their Mobile app or Trade Station Web. 
Scenario.6. Real time Risk based Square off (Anytime during the Day)
  1. Markets are volatile and price movements can be very erratic because of some events. Events can be pertaining to a particular stock or stock market as a whole.
  2. 5paisa Risk Management system monitors volatility in real-time. If the losses arising out of Intraday trades in the Cash and Derivative segment erodes more than 50% of the Net worth of the customer, then the Risk team squares off all open positions.
  3. Open Position includes all Intraday Trades in the Cash and Derivative segment and all Overnight Open Position in the Derivative Segment. 
Note: This is an automated system and excludes all delivery holdings held by customers.

Scenario.7. FNO (Currency and Equity derivatives) Shortage   
RMS liquidation will be done on a T+1 basis for the Mark to Market (MTM) debit/margin shortfall. Even if due to sudden scrip volatility during the day if a shortfall arises during the day due to MTM loss or FNO margin increases RMS liquidation will be done on the same day.  

Scenario.8. Physical Settlement in Equity Derivatives (Before the day of last expiry in a month)
  1. Based on the criteria specified in the SEBI circular, Exchange shall identify securities that shall be settled through delivery on expiry. Exchange shall inform the list of market participants through a circular from time to time.
  2. Securities that are part of the physical settlement will be blocked for further trading from Wednesday BOD (T-1 day) before the last Thursday of the current expiry of the month (only squared of allowed for the current month expiry). 
  3. Positions which are open in physical equity derivatives to those client’s intimation being sent before T-1 day regarding square off of the same.
  4. If square off is not done before 1 working day of the last expiry of the month, the risk team will initiate square off on expiry day on a best effort basis and on available liquidity irrespective of the client margin deposited with 5paisa Capital Ltd.
Scenario.9. Commodity Square off
 
1. Intraday Square off
  1. Intraday Square off At 04:30 P.M. (Market closes at 05:00 P.M.). For Agri Commodities other than those open for trading till Evening.
  2. Intraday Square off At 08:30 P.M. or 09:00 P.M.in case of sun-outage. (Market closes at 09:00 P.M. or 09:30 P.M. respectively). For Agri Commodities those which remain open for trading till Evening.
  3. Intraday Square off At 11:00 P.M. or 11:25 P.M in case of sun-outage. (Market closes at 11:30 P.M. or 11:55 P.M. respectively) For All Other Commodities.
2. Auto Square off System (MTM based) 

All positions (Intraday & or Delivery) shall be squared-off as soon as MTM Loss reaches 50% of the available Net worth.
 
3. Margin Squared off (Shortage)

Positions that do not have sufficient funds can be squared off at any time at the discretion of our RMS desk. There may or may not be a margin call or intimation from our RMS desk. Positions would be squared off proportionally by the risk team to bring down your margin shortfall.
 
4. Physical delivery

Commodities with compulsory delivery will be closed a day before their respective delivery intention periods. We do not allow clients for Physical Delivery Positions. All the deliverable contracts of MCX enter “Tender Period positions” as mentioned by exchange from time to time. Clients' positions will therefore be Squared OFF one day prior to the start of the “Tender Period” of the contract. No positions will be allowed to carry over in Tender Periods. Please note, that the contracts will be blocked for creating a fresh position 1 day prior to the Tender period start.

Any Other Square Off
5paisa Capital Limited may initiate square off of a particular client without prior intimation due to market volatility, debarred by SEBI or as prescribed in any other rules or regulation.

*Intraday square off is merely a right of 5paisa and not an obligation. Intraday squaring off is an action of closing off any open position and it can be done best by the customer himself. Any intraday product which is not squared off shall be carried forward to the next trading day and will be auto-converted into a “Delivery Product”.

Note: Intimations prior to square off are merely add-on services provided as a precautionary measure by 5paisa. 5paisa holds the right to initiate risk-based square off with or without intimations.

P.S. Note: It is advisable to credit funds via UPI and IMPS for clearing the debit balance as the same is updated on a real-time basis.



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