What happens to open positions or debit balances?

What happens to open positions or debit balances?

If a client has open positions or a debit balance, these will not be automatically squared off during the quarterly settlement process. Instead, these positions will be managed according to the company's Risk Management Policy. A square-off will only occur if specific risk parameters are met or there is a margin shortfall.

Key Points

·        Quarterly Settlements: These are mandatory and cannot be opted out of by either the client or the broker.

·        SEBI Requirement: SEBI enforces the settlement process to ensure the proper management of client funds.

·        Open Positions and Debit Balances: These are handled based on the company's risk management criteria and are not affected by the settlement process unless specific risk conditions are triggered.

Understanding these rules ensures that clients know their obligations and the procedures followed by brokers in managing their trading accounts.


    • Related Articles

    • If a client has an open position or debit balance, will it be squared off for settling the account?

      No. Client's open positions or debit balance shall be subject to the Risk Management Policy of the company and square-off shall happen if the risk parameters are hit or a margin shortfall occurs.

    • Why does 5Paisa square off positions?

      5Paisa square off for various reasons. Here are some reasons to help you understand why it is done: Scenario 1: T+6 Debit Square Off Timing: Daily at 3:15 pm Criteria: Square off for clients purchasing NON-APPROVED Stocks. Exception: Debit less than ...

    • What are the auto square-off timings for open intraday positions?

      The auto square-off timings for open intraday positions vary according to the rules and regulations set by specific stock exchanges and brokerage firms. For Equity/Cash Segment : 3.15 PM, Equity Derivatives: 3.15 PM, Currency Derivatives : 4.30 PM & ...

    • What are Open interest limits?

      The highest amounts of open interest permitted for futures or options contracts are known as open interest limits. In simple words, the 'open interest limit' is the maximum number of contracts or positions allowed for a financial instrument. They are ...

    • Can the options premium received be used to open new F&O positions?

      Yes, you can utilize the options premium received to initiate new F&O (Futures and Options) positions. However, there are certain conditions to consider: Same Trading Day: On the same trading day, you can use the options premium received solely to ...