Hellow Nandu,
I too have a question on margins for futures(nifty in particular). Once you deposit certain amount as margin for on line trading in say Nifty Futures, How is that margin amount utilized tradewise?
For example I am using ICICI direct as my on line broker, and have three linked integrated accounts for trading,Demat and saving with them. After depositing the margin money with them I tried trading in Nifty Futures for about 20 trades by squaring off the positions on that day itself without carrying over. I find that in addition to adding/deducting profit/loss respectively and additional amount of Rs.10K is deducted from margin amount also.
I was under the impression that the margins are chargeable only as long as you have a position open, and once you square off the margins charged are deposited back in to the trading account. Since no trade was kept open for the next day, can you explain how the margin amount could have been deducted?
thanks a lot in advance
sharantaka
Hi Everybody,
I will try and explain the nitty gritty in as plain a language as I can.
1) Trading A/c Consists of 2 or 3 Ledgers (Depends who you're dealing with) with the Broker for Your Trading Code that you are allocated.
2) If there are 2 Ledgers for your Trading Code, then one ledger will be called Capital Market Cash Ledger & the other will be F&O (Derivative) Ledger
3) Capital Cash Market Ledger shall consist of BSE & NSE where all your Debit, Credit & Unsettled Trades will figure for buying & selling of Shares
4) Similarly F&O Ledger shall indicate how much money you have to your Credit.
5) If there are 2 Ledgers for Cash market then one shall be for BSE & other NSE.
6) Whatever trades done in the F&O Segment shall consist of
a) Contract for the day (Buy/Sell) & at what rates plus all other mandatory charges such as Rate & Quantity of Buy & Sell of a particular contract in addition you will see mandatory charges as Brokerage, Service tax, STT (0.017% only charged on Sell) plus Transaction & Other Charges inclusive of Stamp Duty which must not exceed Rs.410.00 per Crore on Turnover.... this is one charge where a lot of creative accounting is displayed by the brokerages, resulting in overcharges. Also a point of note if your turnover is high this charge can also be forfeited for High Turnover Clients. Requires some arm twisting on your part
b) Client Summary Report for the day (This report differs in terms of what is shown) depends on your Broker. Normally this report is divided into many parts.
PART 1: Should indicate your Mark To Market Profit or Loss, Brokerage Commission and all the other charges.
PART 2: Should indicate your opening ledger balance.
PART 3: Should indicate your ledger balance less any Span & Exposure Margin for any open position. Span & Exposure Margins are deducted from your ledger balance to show your new c/f balance
PART 4: Should Indicate Cash Collateral and available cash for taking any positon against your pledged shares to Play the derivative. (also called margin Funding) My personal Opinion Never avail of such Funding.
PART 5: Should indicate any open positions and their description & quantity....Basically your Open Postions if any.
That's That....
To answer a particular question of yours Rs.10K, that remains in the F&O Ledger until you request for the Payout of the Amount, only then they will transfer the amount to your Savings a/c or send a cheque for the amount whatever maybe the case.
Again That's That....
If there is anything else that comes to your mind, which I might have overlooked.......will be glad to answer them to the best of my ability....
Seniors & Juniors are most welcome to correct me.........if I have erred in explaining anything....
Regards
SavantGarde
