Understand Your
Daily Margin Statement:-
If you are trading through a stock broker in India in any
of the segment i.e Equities, Derivatives Currencies then stock broker have to
send you Daily Margin Statement as per Annexure B of Exchange Circular Number NSE/INSP/19583
dated December
 |
| Daily Margin Statement |
Segment: - It could be the segment in which your trading
is taking place, Assume you are trading with a broker in NSE Equity, NSE Equity
Derivatives & NSE Currencies then the report should display all the details
pertaining to each segment
Trade Day: - As per brokers terminology it is referred to
as T Day, Assume you traded on 23/11/2015 then T Day or Trade Day would be
23/11/2015 and all your data pertaining to the report would be calculated as on
T Day
Funds (A):-
Funds is nothing but your ledger balance whether debit or credit. In case if
you deposited a cheque in brokers bank account or gave a cheque to broker on T
day then it could be taken in to consideration for calculation but again it is
at a broker’s discretion because brokers want to play safe. Broker would only
consider the cheque once it is cleared and funds are actually transferred in
broker’s bank account.
Value of
Securities after Haircut : - Value of securities are calculated on daily
basis after levying haircut. Remember these securities are the ones in which
you had a debit and stock is being withhold by the broker. As per NSE
Calculation has to take place the member shall compute the value of such
securities as per the closing rate on T-1 day as reduced by the appropriate haircut
at a rate not less than the VAR margin rate of the security on that day i.e.
T-1
day.
Please find the calculations below
Scrip Name
|
Holding
Quantity
|
Illiquid
|
VaR Margin or Haircut by Exchange on T-1 Day i.e
20/11/2015
|
VaR Margin or Haircut by Broker on T-1 Day i.e 20/11/2015
|
Market Rate (T-1)
i.e 20/11/2015
|
Market Value before Haircut
|
Market Value After Haircut
|
Reliance Industries
|
100
|
No
|
12.50
|
12.50
|
946.85
|
94685.00
|
82,849.37
|
Golden Tobacco Limited
|
100
|
Yes
|
47.48
|
47.48
|
48.60
|
4860.00
|
4860.00
|
Total Value of Securities after Hairuct
87,709.30
|
|||||||
Above Calculation are derived as per the appropriate
haircut at a rate not less than the VAR margin rate of the security on that day
i.e. T-1 there are chances that a broker can increase the VaR Margin rate or
Haircut as per their own discretion
Please find the calculation below if the VaR Rate or Hair
Cut is as per broker’s discretion
Scrip Name
|
Holding
Quantity
|
Illiquid
|
VaR Margin or Haircut by Exchange on T-1 Day i.e
20/11/2015
|
VaR Margin or Haircut by Broker on T-1 Day i.e 20/11/2015
|
Market Rate (T-1)
i.e 20/11/2015
|
Market Value before Haircut
|
Market Value After Haircut
|
Reliance Industries
|
100
|
No
|
12.50
|
20.00
|
946.85
|
94685.00
|
75748.00
|
Golden Tobacco Limited
|
100
|
Yes
|
47.48
|
100
|
48.60
|
4860.00
|
0.00
|
Total Value of Securities after HairCut
75748.00
|
|||||||
As you can see in the above table Broker has increased
their own hair cut which is more than exchange specified haircut which also
reduced your holding value. All these is a part of Risk management policy of a
stock broker.
Must Read : What is power of attorney in Demat & Online Trading ?
Must Read : What is power of attorney in Demat & Online Trading ?
Bank Guarantees / FDR:
- Bank Guarantees / Fixed Deposit provided to the broker as Initial Margin
for FO , This should be represented against Equity Derivatives and Equity
Currency Segment in Daily Margin Statement
Any other approved
form of Margins: Approved form of margins is used for Equity Derivatives
& Currencies. As Initial Margin is compulsory to be deposited with a broker
for trading FO & Currency, approved scrips i.e liquid scrips valuation
would be considered in the column.
Logic of the same remains as shown in above table
Total Margins Available: - Funds +/- (Value of Securities
+ Bank Guarantees + Collateral (Shares) ). Remember the data shown is for a
Particular Exchange & Segment for
Example:-
Exchange/ Segment
|
Funds
(A)
|
Value of Securities (After Haircut)
(B)
|
Bank Guarantees / Fixed Deposit
(C )
|
Any Other Approved form of Margins
(D)
|
Total Margin Available
E=(A+B+C+D)
|
NSE CASH
|
1,000 Dr
|
5000 Cr
|
4,000 Cr
|
||
NSE
|
15,000 Cr
|
10,000 Cr
|
7,500 Cr
|
32,500 Cr
|
|
Total
|
14000 Cr
|
5000 Cr
|
10,000 Cr
|
7,500 Cr
|
36,500 Cr
|
Total Summation of the above becomes your Margins
Available to T Day i.e Your Trading Day for particular segment
Margin required by
Exchange end of T Day
Initial Margin:-
Initial Margin is a Span margin levied by exchange to broker and in turn to
you.
Futures options, as well as futures margins, are governed
by the exchange through a calculation algorithm known as SPAN margining
The Standard Portfolio Analysis (SPAN) of Risk system is
a highly sophisticated methodology that calculates performance bond
requirements by analyzing the “what-ifs” of virtually any market scenario
The Standard Portfolio Analysis (SPAN) evaluates overall portfolio
risk by calculating the worst possible loss that a portfolio of derivative and
physical instruments might reasonably incur over a specified time period
(typically one trading day.) This is done by computing the gains and losses
that the portfolio would incur under different market conditions. At the core of the methodology is the SPAN
risk array, a set of numeric values that indicate how a particular contract
will gain or lose value under various conditions. Each condition is called a
risk scenario. The numeric value for each risk scenario represents the gain or
loss that that particular contract will experience for a particular combination
of price (or underlying price) change, volatility change, and decrease in time
to expiration.
Assume you wanted to buy 1 Lot of NIFTY NOV 26/11/2015
FUTURES which would have a Span Margin of around Rs 30000/- & 10 Lot of
USDINR 26/11/2015 would have a span margin of 15162
(Above calculation are
based on last span file of 24/11/2015)
There are certain brokers who levy additional margin over
and above span margin levied by exchange. Such details should be maintained in
brokers RISK Management Policy and additional span margin charged should be
displayed in column J of Daily Margin Statement i.e Additional Margin required
by member as per RMS
Exposure Margin:
Exposure Margin is an additional margin levied by exchange over and above
initial margin to broker and in turn to you.
Exposure margin is the term used for Equity Derivatives & Extreme
Loss Margin as the term used for Equity Currencies
As per exchange compliance, Exchange would charge
exposure margin to broker and it is up to the broker’s discretion to charge the
same to their client again this part is mentioned in brokers RMS policy.
Exposure Margin for Currency segment is not compulsory but
still brokers charge the same
Total
Margin :- Sum of Span Margin (Initial
Margin + Exposure Margin)
Excess
/ Shortfall w.r.t. Requirement by Exchange / NSCCL: - Total Available Margins
(Shown Above) – Total Margin (Initial +Exposure )
Additional
Margin required by member as per RMS: - There are certain brokers
who levy additional margin over and above span margin levied by exchange. Such details
should be maintained in brokers RISK Management Policy and additional span
margin charged should be displayed in column J of Daily Margin Statement i.e Additional
Margin required by member as per RMS
Margin
Status (Balance with Member / Due from client):- The final
figure pertaining to exchange is the amount you require to pay to the broker or
broker has to pay to you and this is the amount in which you beginning of day
or next day trading limit is available
