As per SEBI guidelines, it is to be noted that the following implementations will be made effective from respective timelines.

A: The client has to maintain the required margins in the cash segment similar to that of the derivatives segment with effective from 1st August 2020.

B: The securities of the client will be accepted by GOODWILL only when presented as collateral by the way of Margin Pledge created in the CDSL depository system with effective from 1st September 2020.

A: MAINTENANCE OF MARGINS IN CASH SEGMENT

KEY POINTS:

A sufficient upfront margin is to be maintained in the account before dealing/trading in any share or security.
Similar to the derivatives segment, the cash segment will also now have established, Margin Shortage Penalties.
Client set-off whose holding will not get CFS (Credit For Sale) benefit on the same day, But it will be provided once the settlement has happened i.e T+2 working days.
For BTST trades, margins will be levied on each side of the trade; (i.e) For both Buy and Sell transactions. Sufficient margin is to be maintained for the Sell-side also, failing which penalty will be levied.

ILLUSTRATIONS

Lets Assume Applicable VAR + ELM margin for SBIN is:
VaR – 18.89
ELM – 3.50
Total VaR – 22.39

Illustration : 1 – Margin Requirement
Margin Required = (Price x Qty x Total VaR) / 100
= (180 x 1 x 22.39) / 100
= Rs.40.30/-

Illustration : 2 – Order Execution
Client “A” has Cash balance of Rs.200/- and who placing Buy order in SBIN with 1 Qty @ Rs.180 hence margin required is Rs.40.30/- the order will be completed

Cash Margin = 200
Margin Used = (180 x 1 x 22.39) / 100 = 40.30
Available Balance = 159.70

Illustration : 3 – Order Rejection
Client “A” has a Cash balance of Rs.200/- and who placing Buy order in SBIN with 10 Qty @ Rs.180, hence the margin required is Rs.403.02/- the order will be rejected by the RMS due to insufficient margin.

Cash Margin = 200
Margin Required = (10 x 180 x 22.39 ) / 100 = 403.02
Shortfall Amount = 200 – 403.02 = – 203.02

Illustration: 4 – Calculation of limit or leverage for a particular stock based on Var+ELM

Leverage / Limit = Available Limit / VaR + ELM

SBIN Stock Limit = 200 /22.39 = 8.93 Times

Note:

SEBI has prescribed a penalty structure in case of a margin shortfall in the cash segment similar to that of the derivatives segment.

a. Click here to read the SEBI circular.

b. Click here to view the penalty charges.

B: SECURITIES TO BE GIVEN BY PLEDGE/ RE-PLEDGE IN THE DEPOSITORY SYSTEM

KEY POINTS:

Shares in the client’s Demat account having Power of Attorney in favor of GOODWILL will not be considered as margin provided by the client.
In equity derivatives, commodity derivatives, and currency derivatives segments, securities cannot be moved from your Demat account to collateral, instead, you will have to pledge these securities in favour of GOODWILL in order to get margins.
Depending upon margin requirements, securities that need to be pledged from your Demat account may include shares, mutual funds, or debt securities.

Click here to view the SEBI Circular

For assistance and support contact us at customersupport@gwcindia.in or give us a Call on our customer care number 044-4032 9999

Regards,

Team-GOODWILL