Peak
Margin is a regulatory measure that mandates brokers to collect a minimum
margin from clients before executing any intraday or delivery orders in the
Cash and derivatives segment. The main objective of Peak Margin is to curb
excessive leverage in intraday and derivatives positions.
Clearing
corporations play a pivotal role in determining Peak Margin by taking four
snapshots at predefined time intervals throughout the day to calculate margin
requirements on open positions. The highest margin requirement among these
snapshots is considered as the Peak Margin.
The
implementation of Peak Margin aims to promote effective risk management and
mitigate potential market volatility resulting from excessive leverage. It
ensures that traders maintain adequate margin cover to fulfil their obligations
and reduces the risk of default.
Brokers
are tasked with ensuring that their clients follow the prescribed Peak Margin
requirements set by regulators. Compliance with Peak Margin requirements is
essential for traders wishing to engage in intraday and derivatives trading in
the Cash segment.
Related Articles
How will peak margin affect margins for Hedge Positions?
Customers benefit from margin when their trades are hedged. However, it's crucial to note that if you close the hedge position, you should prioritise closing the leg of the transaction with higher margin requirements first. Failing to follow this ...
How will peak margin affect my margins for trading in the derivatives segment?
For Intraday trading: The maximum exposure for intraday trades will now be limited to 5X For Hedge Margin Trades: If you're trading with a hedge, you enjoy the margin benefit. However, if you decide to close the hedge position, it's crucial to first ...
How will peak margin affect my margins for trading in the Cash Segment?
For intraday trading: The maximum exposure for intraday trades will now be limited to 5X. For selling delivery: Currently, we, as 5paisa, release 100% of the selling value for purchasing other stocks or taking derivative positions. However, starting ...
What is Margin? And what is the type of margin?
Margin refers to borrowing money from your broker to buy stocks. Instead of paying the total price upfront, you only need to deposit a portion. It allows you to leverage your investments, potentially increasing your returns. However, it also carries ...
What is BTST Margin blocked?
BTST stands for “Buy Today, Sell Tomorrow”. It is a trade strategy where you purchase a stock to sell it immediately. However, the broker blocks a certain amount of funds while executing the BTST trade, known as the BTST margin. This blocked margin ...