Losses due to STT on Notional Value of in the money Options on Expiry Lesson for Discount Broker

princy01

Well-Known Member
#31
Ok i agree with you in principle, as I said we should fight for stt removal. Problem is that nobody is going to do it, who is going to fight for it?

Peace
 

copypasteaee

Humbled by Markets
#32
There are normal principles of justice. If you understand that, then they can be compared.

While it is right to fight for STT removal, you still do not understand.
We are the largest democracy, and we cannot have such draconian tax. For maths, I have given an example of 263% tax on gross receipts, and I repeat, gross receipts, not the profits. It will go up even further with the closing price closer to the Strike price on ITM Options.
If you are taxed, let us say, 263% of your income, that means you need to pay all that you have received, and also pay over one and a half times more to the govt. Nobody would imagine this kind of taxation, and by normal practice one would imagine the taxes to be a small portion of only the income (Not receipts). This is not taxes, but robbery by asking for more than the reciepts. So ignorance does not allow them to be robbed by way of STT!
Do not justify saying that govt needs money to run!
why did you take buy position in expiring option contract on expiry day? That shows your lack of understanding. Some people learn from mistakes of others and some prefer to make mistakes themselves. I am sure now you will never buy option on expiry day.

The following news was flashed in all business news few days back:

https://www.quora.com/How-did-Chirag-Gupta-lose-24-lakhs-in-five-minutes-on-the-stock-market

https://profitstreetind.blogspot.com/2017/04/this-day-trader-lost-rs-24-lakh-in-5.html
 
#33
why did you take buy position in expiring option contract on expiry day? That shows your lack of understanding. Some people learn from mistakes of others and some prefer to make mistakes themselves. I am sure now you will never buy option on expiry day.

The following news was flashed in all business news few days back:

https://www.quora.com/How-did-Chirag-Gupta-lose-24-lakhs-in-five-minutes-on-the-stock-market

https://profitstreetind.blogspot.com/2017/04/this-day-trader-lost-rs-24-lakh-in-5.html
I have no positions. Check out my other thread!
http://www.traderji.com/community/t...tions-on-expiry-probably-with-a-booty.105107/

I am trying to rectify this issue. Now the losers could get a lot more, maybe, NSE is going to be in trouble.
 

MewarLion

Active Member
#34
Great Relief

Finally BSE has given option Facility of providing ‘Do not Exercise’ instruction on Expiry day in Equity Derivatives

Members of the Exchange are aware that currently after end of trading session on expiry day, all open long positions across In-The-Money options contracts are automatically exercised and cash settled. Members may note that Exchange shall be introducing new facility of providing ‘Do not Exercise’ instruction on certain in-the-money options contract on expiry day.


Salient features of the new facility are as follows-

· Buyer of option can indicate a choice not to exercise In-the-money open long positions on the expiry day which are currently exercised automatically.

· This facility shall be provided on Index options & Stock options contracts.

· On day of the expiry, a file EX_POTM_<CLG.NO.>_YYYYMMDD.CSV/ EX_POCM_<CLG.NO.>_YYYYMMDD.CSV containing long open positions on ‘Close-To-The-Money’ options contracts would be provided to the member.

· Close-To-Money (CTM) options contract shall be identified as under -

ü Three ITM option series having strike prices immediately higher than final settlement price (for put options) and three ITM option series having strike prices immediately lower than final settlement price (for call options) shall be referred to as CTM option contracts.

· Trading Members would be provided file EX_POTM_<CLG.NO.>_YYYYMMDD.CSVfor their own and client level positions and Clearing Members would be provided EX_POCM_<CLG.NO.>_YYYYMMDD.CSV file containing their CP- code level positions. Members desirous of not exercising the option shall be required to submit “Do not Exercise” (i.e. to mention N” against the positions in the file) instructions against each client-wise long position on the CTM contracts within stipulated session timings.

· If a member opts not to exercise a long position in a CTM contract, such position shall expire unexercised and lapse.

· If a member does not provide any response within the cut-off time or if the information provided by the member is incomplete or not valid, then as per existing procedure such long positions shall be automatically exercised.

· All other open long positions on ITM options contracts other than CTM options contracts shall be automatically exercised as at present

· Such auto-exercised positions would be randomly assigned to the options writers/sellers.




Operational mechanism to indicate choice to Exercise In-The-Money option contracts





Ø At the end of Expiry day, a new file called as ‘Option Exercise File’ (EX_POTM_<CLG.NO.>_YYYYMMDD.CSV)/(EX_POCM_<CLG.NO.>_YYYYMMDD.CSV) containing client wise open long positions on CTM options contracts shall be provided to member on Extranet.

Ø Member has to provide response as “N” against position which he does not want to exercise. Member shall be provided a time window of 30 minutes to submit “Do not Exercise” (“N” instructions against each client-wise long position in the CTM contracts. This window shall be available from 4:30 pm to 5:00 pm on expiry day (monthly as well as weekly expiry) or as per the timings as announced from time to time.

Ø A new column “Exercise Instruction” has been added at the end of file where ‘N’ which stands for ‘Do not Exercise’ to be provided and uploaded back to Extranet.

Ø If member does not provide any response within the cut-off time or if the information provided by member is incomplete or not valid, then as per existing procedure such client-contract-long positions shall be automatically exercised.

Ø During the option exercise window, member can upload the file multiple times (file should contain cumulative records) and every record shall be responded with “Response file” and system shall consider the latest file uploaded by the members within the stipulated time.







Operational Timelines -





Sr No

File name

Remark

Session Timings

1

EX_POTM_<CLG.NO.>_YYYYMMDD.CSV

Client wise CTM contract open long position file shall be provided on Extranet to trading members

4:30 pm

2

EX_POCM_<CLG.NO.>_YYYYMMDD.CSV

Client wise CTM contract open long position file shall be provided on Extranet to clearing members for CP code level positions

4:30 pm

3

EX_POTM_<CLG.NO.>_YYYYMMDD.Mnn

Trading members to upload Exercise request on the Extranet system

5:00 pm

4

EX_POCM_<CLG.NO.>_YYYYMMDD.Mnn

Clearing members to upload Exercise request on the Extranet system

5:00 pm

5

REX_POTM_<CLG.NO.>_YYYYMMDD.MNN

Response file to the trading members

---

6

REX_POCM_<CLG.NO.>_YYYYMMDD.MNN

Response file to the clearing members

---





File format & sample file is enclosed herewith for ready reference as ANNEXURE.

Trading & Clearing members may note that this functionality shall be introduced with effect from monthly expiry of August 2017 i.e. August 31, 2017.

For any further clarifications, Members may contact their relationship managers or following officers:-



Particular

Contact Number

Email ID

Trading related queries

022-22728226/8436/8039

[email protected]

Clearing and Settlement related queries

022-22728881/8185/8467

[email protected]





For and on behalf of BSE Ltd & ICCL,



Ketan Jantre

Hitesh Shah

General Manager-Trading Operations

Asst.General Manager-ICCL

http://www.bseindia.com/markets/MarketInfo/DispNewNoticesCirculars.aspx?page=20170821-18
 
#35
Good, but nowhere enough. Still the ITM Option holders are being forced to lose their ITM portion.

The exchanges were collecting more taxes than what is mentioned by the Govt, that had made some lose heavily.

I was mentioning that the concerned guys were afraid of this getting exposed. This seems to be a damage control exercise to cover up their mistake.

But surprised at the traders not understanding. All that the people who lost money have to do is, file a case in the court of law and get their money back. That is the reason why I had asked for support from our fellow traders, which I am sad to note, was not forthcoming, but for just a few.
 

MewarLion

Active Member
#36
Now NSE has also issued Circular
NATIONAL SECURITIES CLEARING CORPORATION LIMITED
DEPARTMENT : FUTURES & OPTIONS
Download Ref No : NSCCL/CMPT/35635 Date : August 22, 2017
Circular Ref. No : 89/2017
All Members,
Sub: Facility of ‘Do not Exercise’ in Equity Options
This is in partial modification to circular reference no.NSCCL/CMPT/34657 dated April 17,
2017 Part B- 5.3 regarding Exercise settlement for option contracts. Currently all “In the
Money” (ITM) equity options are automatically exercised on the expiry day of the contract.
A facility will be provided to specify ‘Do not Exercise’ instruction on Expiry day in Options
contracts. On the expiry day, members shall be given an option to specify not to exercise
in respect of Close To Money (CTM) option strikes. This facility shall be provided on
Collateral Interface for Members (CIM) platform under menu “Exercise Request”. All ITM
option contracts, not in the ‘CTM’ option series, shall be exercised automatically as per
existing practice.
The CTM strikes range shall be arrived as under:
1. For Call Options - 3 ITM options strikes immediately below the final settlement price
shall be considered as ‘CTM’
2. For Put Options - 3 ITM options strikes immediately above the final settlement price
shall be considered as ‘CTM’.
A file containing the CTM contract details shall be downloaded to the members on expiry
day. A facility to download the file containing the details of CTM positions shall be
provided. This file shall contain all CTM long positions and Exercise Flag shall be set as
‘Y’ as default option. A file upload facility shall be provided to the members to specify an
option to change default Exercise Flag from ‘Y’ to ‘N’. A response file shall be generated
for each file uploaded by the member.
The Member can upload the file specifying the exercise instruction multiple times till the
cut off time as mentioned in below table. If the member does not provide any preference
within the cut-off time or if the information provided by the member is incomplete or not
valid, then as per existing procedure such positions shall be automatically exercised. The
positions where Exercise Flag is indicated as ‘N’ by the cut-off time shall not be exercised.
Regd. Office : Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051 Page 2 of 2
File format and timelines is as follows-
Sr
no Particulars Annexure
Reference
Tentative
Timelines**
1
File providing the details of CTM
contracts
Annexure 1 4.00 PM
2 File providing the details of CTM
positions.
Annexure 2 4.30 PM
3 File to be uploaded by member
for ‘Do not Exercise’ instruction
Annexure 3
4.30 PM to 5.00 PM
4 Return file for ‘Do not Exercise’
instruction uploaded by member
Annexure 4 4.30 PM to 5.00 PM
** A facility to view the time window applicable for the day shall be provided on CIM.
Trading members are required to provide “do not exercise” instruction for their client as
well as proprietary positions. Trading cum Clearing members are required to provide
exercise instruction for their Custodian Participant positions in addition to their client &
Proprietary positions. Professional Clearing Members are required to confirm for their
Custodian Participant positions only.
At the cut off time, the latest record of all the ITM positions shall be taken for automatic
exercise.
This functionality shall be introduced for all weekly as well as monthly expiry with effect
from August 31, 2017.
For and on behalf of
National Securities Clearing Corporation Ltd.
Nisha Pillai
Senior Manager
Telephone No Fax No Email id
18002660057 +91-022-26598269 [email protected]
 

ocil

Well-Known Member
#37
Can any one advise me if I sell Rs 100 call and Share is trading around Rs 95 on expiry day? Do i have to close my short call on expiry day due to STT issue?
 

toocool

Well-Known Member
#38
Now NSE has also issued Circular
NATIONAL SECURITIES CLEARING CORPORATION LIMITED
DEPARTMENT : FUTURES & OPTIONS
Download Ref No : NSCCL/CMPT/35635 Date : August 22, 2017
Circular Ref. No : 89/2017
All Members,
Sub: Facility of ‘Do not Exercise’ in Equity Options
This is in partial modification to circular reference no.NSCCL/CMPT/34657 dated April 17,
2017 Part B- 5.3 regarding Exercise settlement for option contracts. Currently all “In the
Money” (ITM) equity options are automatically exercised on the expiry day of the contract.
A facility will be provided to specify ‘Do not Exercise’ instruction on Expiry day in Options
contracts. On the expiry day, members shall be given an option to specify not to exercise
in respect of Close To Money (CTM) option strikes. This facility shall be provided on
Collateral Interface for Members (CIM) platform under menu “Exercise Request”. All ITM
option contracts, not in the ‘CTM’ option series, shall be exercised automatically as per
existing practice.
The CTM strikes range shall be arrived as under:
1. For Call Options - 3 ITM options strikes immediately below the final settlement price
shall be considered as ‘CTM’
2. For Put Options - 3 ITM options strikes immediately above the final settlement price
shall be considered as ‘CTM’.
A file containing the CTM contract details shall be downloaded to the members on expiry
day. A facility to download the file containing the details of CTM positions shall be
provided. This file shall contain all CTM long positions and Exercise Flag shall be set as
‘Y’ as default option. A file upload facility shall be provided to the members to specify an
option to change default Exercise Flag from ‘Y’ to ‘N’. A response file shall be generated
for each file uploaded by the member.
The Member can upload the file specifying the exercise instruction multiple times till the
cut off time as mentioned in below table. If the member does not provide any preference
within the cut-off time or if the information provided by the member is incomplete or not
valid, then as per existing procedure such positions shall be automatically exercised. The
positions where Exercise Flag is indicated as ‘N’ by the cut-off time shall not be exercised.
Regd. Office : Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051 Page 2 of 2
File format and timelines is as follows-
Sr
no Particulars Annexure
Reference
Tentative
Timelines**
1
File providing the details of CTM
contracts
Annexure 1 4.00 PM
2 File providing the details of CTM
positions.
Annexure 2 4.30 PM
3 File to be uploaded by member
for ‘Do not Exercise’ instruction
Annexure 3
4.30 PM to 5.00 PM
4 Return file for ‘Do not Exercise’
instruction uploaded by member
Annexure 4 4.30 PM to 5.00 PM
** A facility to view the time window applicable for the day shall be provided on CIM.
Trading members are required to provide “do not exercise” instruction for their client as
well as proprietary positions. Trading cum Clearing members are required to provide
exercise instruction for their Custodian Participant positions in addition to their client &
Proprietary positions. Professional Clearing Members are required to confirm for their
Custodian Participant positions only.
At the cut off time, the latest record of all the ITM positions shall be taken for automatic
exercise.
This functionality shall be introduced for all weekly as well as monthly expiry with effect
from August 31, 2017.
For and on behalf of
National Securities Clearing Corporation Ltd.
Nisha Pillai
Senior Manager
Telephone No Fax No Email id
18002660057 +91-022-26598269 [email protected]
How does it work if I am buyer
 
#39
I have not exercised option due to fear to stt, now want to try it out, attached sheet with all details of turnover tax, sebi, brokerage etc. Members please comment, this will give enable to trade on expiry date or not. Most of the time i dont trade options on expiry due to fear of STT. Appreciate response as expiry is nearing (28/09/2017)
 

Attachments

MewarLion

Active Member
#40
@toocool In case if you have any position after close of market on expiry day which is in the money , Inform your Stock Broker that exercise only if i get some money. If exercise result in net payment , do not exercise. This will help you to avoid STT liability beyond your in the value money.
 

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