Stock Value after Haircut

[vmonu]

Hi All

Can anyone throw some light on the following terms?

1. Stock Value after Haircut
2. Other Collaterals
3. Total Collateral Value

 

[hills_5000]

1.Haircut is the percentage that is deducted by the broker when he is giving you margin on your stocks. For example if you have 100 shares of RCOM in your DP then based on today's closing ( assume it is 180 ) , even though your holding is equal to Rs 180*100 = Rs 18000 , but , since NSE rules stipulate a haircut of 25% ( i think it is 25% for this stock) you will get a margin of Rs 13,500 only against your holding.

2. When you use stocks in your DP to take a postion in F&O segment , then the margin required for the future ( lets assume nifty future) will be Rs 25000 ( round figure for ease of calculations). To take this position you should either have Rs 25K in your trading account in cash or the value of stocks post haircut should be equal to or more than Rs 25K... When you use your DP stocks to take a position in futures then the equivalent value of stocks (after haircut ) will be locked in as collateral. in the above example you will get Rs 13,500 as margin towards 100 shares of RCOM and all 100 of them will be locked up . Hence either you have more shares or have the balance amount as cash to take a position in one lot of NIFTY FUTURE. You can however sell your collateral whenever you want.

3..That is your total collateral value i.e sum total value of stocks before haircut .

Hope it's clear now.

regards

Hi All

Can anyone throw some light on the following terms?

1. Stock Value after Haircut
2. Other Collaterals
3. Total Collateral Value