What is retention statement

Any one heard about Retention Statement?

When is a Retention Statement issued?

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Hi Karthik,

SEBI mandates that every broker shall once in a quarter, transfer any excess funds lying in the client's trading account back to his bank account. What it means is that in case there are any unutilized funds in your trading account, the broker is compulsorily required to send these funds back to your bank account.

This was with the intention of ensuring that brokers don't misuse clients idle funds.

However there are cases when the broker need not refund the money to the client's accounts. This is when:

  • The client's balance is less than Rs.10,000.
  • After blocking 2.25 times of the margins levied for open position held by a client if the balance is in debit.

Let me explain the second point.

Assume you have ₹ 1,00,000 in your account and have taken 3 lots of Nifty (Assume margin for one lot of Nifty is ₹ 27,000), then ₹ 81,000 would be blocked from your account leaving you with a balance of ₹ 19,000.

The Exchange allows a broker to block 2.25 times of the margin it levies for the open position held by the client and after blocking such 2.25 times margin if there is any credit, it needs to be reversed. Going back to the above example, 2.25 times of ₹ 81,000 would be ₹ 1,82,250. Since the funds available in your account is only ₹ 1,00,000 the broker need not make any refund and will mark your account as 'retained'. Once the broker marks your account as retained, he is required to send you a statement explaining the basis of such retention. This explanation is explained to you through the 'Retention Statement'

However after applying the 2.25 rule, if there is any credit standing in the client's account, such fund will have to be reversed to the client's bank account.

Format is as specified by the Regulators. You can refer to Annexure I here.

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Zerodha rocks again
Actually this information is needed for my friend
But got the answer very quickly and precisely
Thanks keep it up

Neat explanation Venu. Thanks for the info.

Can you explain this clearly?

I am new to these and unable to understand that.

Taking 3 lots of Nifty means buying those shares right? Is that intraday or delivery?

How will they consider those?
I mean is that buying happened in that quarter? Or on the last day of the quarter.

Sorry if it sounds stupid to ask.

This is a beautiful mess. Buying 3 lots of Nifty refers to buying 3 lots of Nifty futures. These are not shares. These are futures which are a derivative of the index/stock and are traded in lot sizes. There is no concept of delivery here. Futures are only cash settled. You can trade futures either for intraday or carry the position. The margin required will vary accordingly.

Read the futures trading module from Varsity and enlighten yourself.

Sir I have also same problem.
Retained amount & retention amount means I have to pay or amount can be blocked ?

My retained amount is showing 10281 & retention amount is showing 339 in statement for the date 10.04.2018, which I have received on yesterday.

I am new in market & I am trading since last 2 months so I don’t understand what is the retained & retention