How much margin is blocked in case of CNC?

[Jack_R]

How much margin is blocked in case of CNC?

1. Suppose I have bought 10 lakh shares or 10 Rs, How much money do I pay? 10 lakhs * 10Rs only? or some additional margin?

2. After 5 days, there is an unrealized loss of 2 lakhs. Does this unrealized loss amount get deducted from the available margin?

How do things work in the case of delivery of shares? I am aware of the intraday margin but wanted to know the margin requirement in case of delivery of shares.

[prakash1975]

@Jack_R

• Suppose I have bought 10 lakh shares or 10 Rs, How much money do I pay? 10 lakhs * 10Rs only? or some additional margin?
• After 5 days, there is an unrealized loss of 2 lakhs. Does this unrealized loss amount get deducted from the available margin?

1. Only 10 lakhs * 10 INR and keep some loose change in the trading account for paying the related transaction charges for the purchase.

2. No need to maintain additional margins or liability of future obligations on this scenario. You have paid in full at the time of purchase.

[Jack_R]

@prakash1975

• Only 10 lakhs * 10 INR and keep some loose change in the trading account for paying the related transaction charges for the purchase.
• No need to maintain additional margins or liability of future obligations on this scenario. You have paid in full at the time of purchase.

so basically, there is no margin concept in case of delivery (CNC) right?

[prakash1975]

@Jack_R

so basically, there is no margin concept in case of delivery (CNC) right?

No margin concept when you buy using CNC and take delivery of shares into your demat account.

But, when you sell shares from your demat (CNC sale) the entire sale proceeds won’t be credited to you trading account on the same day of sale. I think its about 80% gets released on the same day and the rest 20% of the sale proceeds gets released to your trading account 2 days later.

[iamshrimohan]

@Jack_R

1. From the margin perspective, it is 20% which you should have to initiate the trade. This margin can be atleast 50% in CASH component and rest in non-CASH component. So in your case, the amount would be approx 2 lakh. But during settlement you have to pay complete 10 lakh to the clearing corporation. However, to avoid this risk, most of the brokers block the entire amount of 10 lakhs (as per their RISK policy). No additional margin is needed as you are already paying the complete order value.

2. No impact of un-realized loss unless you have either bought them via MTF (Margin Trading Facility) or pledged them to get collateral margin.

When you sell delivery shares, you make an early pay-in (instructing the broker that you have shares and are marking them to be delivered during settlement). In that case, you get 80% of the sale value as margin benifit.

[prakash1975]

@iamshrimohan

• From the margin perspective, it is 20% which you should have to initiate the trade. This margin can be atleast 50% in CASH component and rest in non-CASH component. So in your case, the amount would be approx 2 lakh. But during settlement you have to pay complete 10 lakh to the clearing corporation. However, to avoid this risk, most of the brokers block the entire amount of 10 lakhs (as per their RISK policy). No additional margin is needed as you are already paying the complete order value.
• No impact of un-realized loss unless you have either bought them via MTF (Margin Trading Facility) or pledged them to get collateral margin.

Why create unnecessary confusion with irrelevant information?

must be a financial advisor or a technical analyst.

[Jason_Castelino]

He joined just 7 hours back. Am sure he was trying to be helpful.

@prakash1975

Why create unnecessary confusion with irrelevant information?

[iamshrimohan]

@prakash1975 Just an investor, who has been into the markets since 2008! Helping traders and investors!