Maximum 5x leverage from September 2021 in Equity segment, in F&O segment there will be no leverage offered from September 2021.
You will continue to get margin benefit for hedged positions just like you are getting now, there have been no changes in this.
The margins for overnight positions remain the same, as you don’t do much Intraday, there will be minimal impact.
From Sep 21, the margin requirements of intraday will be similar to that of overnight positions, which is 20% or in other words max of 5x leverage.
No, 5 times max leverage is for equity for intraday from sep 1 2021, fno no leverage for intra or carry forward from sep 1 2021, full span+exposure is required.
Siva, If span + exposure margin is 20% of full position from Sep 21, isn’t that 5x leverage w.r.t full 100% position.
This minimum 20% value of the position applies only for Equity segment, not for F&O. For F&O you will need full SPAN + Exposure margin from September 2021.
F&O are already a leveraged product if you compare SPAN + Exposure margin collected to the notional value of the contract.
Adding to shubh, span+exposure can be 40% or 70% of total also, so don’t take in terms of leverage, just consider it as required margin.
Got it. Let me try to reiterate that with an example. Hopefully I got it right.
If notional value of a contract is 5 lakhs then FULL span + exposure margin required is 1L or 20% of that.
From 1st Dec, intraday FnO positions needs a margin requirement of 25% of 1L, which is 25,000 for intraday FnO position. This requirement goes-up to 100% of FULL span + exposure margin or full 1L from Sep 21.
Obviously if the regulatory later decides to change FULL span + exposure margin to say 40% of notional value, then the margin requirements will be 2L (assuming 5L notional value)
Yes, your interpretation is right.
How will it affect to the margin benefits in options hedged positions? E.g. Buy against sell in both MIS & NRML.
Margins will increase for Option writing as well, margin requirements will be as belows:
25%(4X) of the SPAN + Exposure margins until Feb 2021
50%(2X) of the SPAN + Exposure margins until from Mar to May
75%(1.33X) of the SPAN + Exposure margins until Jun to Aug
Full SPAN + Exposure margins from Sep 2021
so basically from sept 2021 MIS and NRML will be the same…no leverage for fno we have to pay full NRML amount EVEN we do intraday right?
You will continue to get margin benefits for hedged positions as you are getting now but margin requirements will increase for for MIS, we have explained above, how much margins will increase and when.
Can someone help me understand this? Right now the margin required for option buying, a 100rs contract in nifty would be 7,500rs and 400rs contract in Bank Nifty would be 10,000rs. What would the margin required be after sep 2021 when the new sebi guidelines are fully in effect?
No changes for option buying, margins are for futures and option shorting.
Okay got it! Thank you!
Hi @nithin is will be standard with margins offered around the World.
But is it reasonable to ask full margin for currency derivatives where the daily movement is very low?