On 24/6 I received a SMS from broker saying that no margins will be given and that full money will be needed for trading. Why is it that on the day of the event we receive this notification and not a day or two before?
The risk of being a brokerage firm is that if a client loses more money than what is in the client’s trading account, the broker has to make up for that loss. So a brokerage has to be extremely careful on managing a client risk.
A brokerage’s perception of risk can change dynamically, so it is possible that leverage rules are changed based on his view of the current risk changes.
Products like futures and options already have an inherent leverage. So brokers who give additional leverage on F&O products for intraday have to be extra careful.
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Thanks Nithin for your quick reply. My question is why the information about no margin is given on the day of the event and not a day or two before the event? Like brexit was lined up on 24/6, sms was received on 24/6 about no margin, Can’t we receive this SMS a day or two before? Say on 22/6 or 23/6?
informing a few days before can create unnecessary confusion. For example, if the event is postponed, then all traders should be informed again. I think best is to inform on trading day morning itself as being done now.
And with brexit, the exit itself was a surprise to the entire world, and I guess you had seen how markets had moved immediately after the news (before Indian market opening), so when such surprise news comes out, we have to react to cover the risk for everyone.