How does the latest SEBI circular about margin requirements affect me?


#43

Mutual funds are a little tricky, especially with funds which have regular dividends (we get the dividend, which has to be passed to you, accounting is a pain), dividend in terms of new units, funds with lock in, etc… We will do it, but this will maybe take more time.


#44

Thank you very much!


#45

Thanks Som!


#46

@nithin

Suppose I Want To Buy Nifty 11000 CE June And Its Currently Trading @ 30 RS.

To Buy It Will Require Rs 2250/- (75*30) Margin

So My Question Is If I Have 3000 In My Account Will I Able To Buy This Option Or Not If Not Then Please Explain With Example


#47

When you buy options, you don’t need margins, you just need the premium for which you put 100% of your capital.

So answer to your question is yes, you can buy.


#48

In Zerodha, I guess the margins (SPAN + Exposure) are collected upfront , in anycase for both option writing and Futures. Is my understanding correct ? Will the margin requirement increase with this new SEBI order ?


#49

Correct.

No, it make sure all brokers collect both span and exposure upfront and make sure all losses are also covered.
Span+ exposure+ losses(if any in futures) <= cash+ collateral( stocks pledged)

Currently exposure is up-to broker to charge but with this new circular exposure is also mandatory.


#50

So For Losses I Have To maintain More Balance In My Account. @siva


#51

Other Than What I HAve Already Paid Margin Against Purchasing The Future


#52

in simple words even now some brokers charge only Span margin wherein some brokers charge Span plus exposure margin .as per sebi circular since revised, from July 01 all brokers must charge both the margins (span plus exposure ) …


#54

Hi @nithin To start with allow only growth mutual funds where only the NAV changes and there is no dividend paid out either in terms of cash/units.


#55

Yes that is the plan. Waiting on releasing the new version of Q, that is of utmost priority for us currently. All pledge requests etc come through Q.


#56

@nithin Hi Nithin. Thanks for your answer. I have a query. I am an option writer. Out of the money option writer. I sell options and wait for them to become 0 as they move in my direction. I am a bit confused about this new circular because previously I just used to check how much money is required to sell 1 lot. So if money required for Nifty PE selling was 65000 and I had 66000 in my account, I simply used to sell it. Same way for stocks. I never cared about span+exposure. But now I have read it so I was paying span plus exposure till now.

My query is that with new rule from july 1 how does that change? Does it mean that now If I have shorted a Nifty PE for ₹65000/- then I have to maintain an extra margin of 65000 with broker or exposure margin of ₹24000 for same with broker or if I have total 66000 then i can short for 65000 and rest 1000 is in my margin and i don’t have to worry? Or if I have shorted multiple puts then multiple exposure margin is to be maintained? Or is it going to effect brokers and customers who were trading only on span and now will have to shell out extra for exposure?

I know its confusing on what I have asked. Really appreciate your time.


#57

Looks like you traded with sufficient margins, so life won’t change for you. You just need 65000 totally per lot shorted, nothing more.


#58

One more query. I heard that margin required is about to increase from 1st July, 2018 for all FNO. by 15 to 20 thousand rupee. Is it correct ?


#59

Go through the above thread from the start. The date has been pushed from June 1st to July 1st.


#60

Can I depend upon “Margin Available” (available in Kite > Funds section) at all times to trade? I read in another post that due to settlement cycles, the margin available might not truly reflect unencumbered balance.

For example: Lets say my margin used is 1 lakh and on the expiry day I book a profit of Rs 10000, and my margin gets released. So Kite’s ‘Margin Available’ now shows Rs 110000. With this Rs 110000 margin, now can I sell options (on the same expiry day) for overnight position - or should I wait until T+1 (ie day after expiry) to put in fresh overnight sell options?


#61

Margin available would include profits made on Trade day also. However, for the sake of margin reporting, we don’t consider profits made since they’re realized on T+1 day.

In the above mentioned case, if you take a position where margins required would be 1.1 lac, we would report available margins as only 1 lac and there would be a penalty levied @ 1% on the shortfall amount of Rs.10,000


#62

Thanks @VM1. So, essentially, we should not depend on the real-time “Margin Available” (available in Kite > Funds section) at all times to trade since it includes profits made on Trade day also as against “Margin Reporting” requirements. This implies that we need to manually keep track of how much margin was used in previous trade so that once it gets released on trade day, that much amount alone is safe to use again on same trade day for next trade.
It would be great if next version of Kite has this feature of showing the real and unencumbered margin available real-time instead of traders manually keeping track of it.


#63

@nithin absolutely agree with this comment here. Please take note.