Finvasia

[timepass]

Dear TJ Members

There have been some ongoing questions about our leverage charges and we would like to share its logic & calculations to clear the doubts. Please note that leverage charges are the risk premium that we charge to offset potential risk that evolves from providing that leverage to the clients. Lets discuss the effective leverage cost

For the purpose of this example: Let’s assume that an investor has 1 Lack worth of fund in his/her account (including VAR adjusted stock holdings) and he/she plan on taking intraday leverage to invest in the market. Considering an average trading month has 22 trading days, here’s how the leverage calculations work.

1. Basic Plan: 2X leverage is free of cost - You can invest up to 2L worth of margin capital without any cost.

2. Bronze Plan: 3X leverage - If you wish to invest 3L. In this scenario, you have 1L of your own funds and have already utilized 1L of Finvasia’s capital free of cost. For the additional 1 L over and above 2 L that you have already invested you will be paying Rs 68 for day you have availed the service. On an annual basis this translates to 9% interest on the 2L of total Finvasia’s capital that you have borrowed.

3. Silver Plan: 4X leverage – Similarly if you wish to invest 4L. In this scenario, you have 1L of your own funds and have already utilized 2L of Finvasia’s capital. For the additional 1L over and above 3L that you have already invested you will be paying Rs 136 for day you have availed the service. On an annual basis this translates to 12% interest on the 3L of total Finvasia’s capital that you have borrowed.

4. Platinum Plan: 5X leverage – Likewise, you wish to invest 5L. In this scenario, you have 1L of your own funds and have already utilized 3L of Finvasia’s capital. For the additional 1L over and above 4L that you have already invested you will be paying Rs 204 for day you have availed the service. On an annual basis this translates to 13.5% interest on the 4L of total Finvasia’s capital that you have borrowed.

The table below explains the cost and charges-

View attachment 25279

Lets understand these leverage plans by means of a working example with actual numbers, shown in the table below.

Now, lets assume that an investor plans on trading Bank-nifty with intraday leverage. Also, assuming that margin requirement for 1 Lot of Bank-nifty is 80,000 INR, and intraday trade means both Buying and Selling of Bank-nifty

View attachment 25280

Also, please note that in the above example, if you take leverage you can trade in any scrip. Say for example, you take leverage and trade in bank-nifty and then during the day you find an opportunity in nifty, you can use the same available margin for nifty and for that reason in any other stock / future or option. There is NO additional per scrip, per trade or per crore cost to your trades. As we say, convenience should have a cost, not buying & selling

We hope this information was helpful. We shall be building leverage calculator to be available in PRISM shortly.

Thanks

@ Finvasia

Please reply various queries posted by us, on your leverage policy
Thanks

Posted above is their detailed post on leverage policy. Maybe some you had some other questions ??

 

[traderniftybull]

Posted above is their detailed post on leverage policy. Maybe some you had some other questions ??

Yes,
I have posted a detailed query vide post 897 and many other members have also posted their queries.

 

[timepass]

Yes,
I have posted a detailed query vide post 497 and many other members have also posted their queries.

Exactly which post ?? The post no. 497 is by the member Kaly22000. Please select the post containing your query and repost it, maybe the broker needs a reminded or missed it.

 

[traderniftybull]

Please clarify
1. There is no minimum limit of trading amount in ones trading account.
2. But the limit will be calculated as per opening balance of my trading account.
3. The leverage will be provided only for MIS trades or for NRML trades as well.
4. The facility is available for future trades only or for options (buy) also.

Now a practical approach (an example)
Suppose I have a balance of 50000 in my trading account. And I already have a overnight position of 10 lots of CrudeM and used a margin money of say 46500. Now I can avail upto 50000 from you for my trades, free of any charges and 1L, 1.5L, 2L on payment of charges.

If I am right in my thinking, then whom should I contact to avail this facility and do I have to make a request daily for such leverage or there is a way out.

Thanks

ha ha
its post 897

 

[Finvasia]

Please clarify

Hi TNB, please see our comments below:

1. There is no minimum limit of trading amount in ones trading account.

You need minimum 10,000 in Silver (4X) & 20,000 to avail Platinum (5X) plan just to cover some risk.

2. But the limit will be calculated as per opening balance of my trading account.

Yes, based on the opening balance of your account (including VAR of stocks)

3. The leverage will be provided only for MIS trades or for NRML trades as well.

For Futures its MIS only, for Stocks you can take upto 2X leverage in NRML upto T+5.

4. The facility is available for future trades only or for options (buy) also.

In Options, SELL side only. Basic : 1X, Bronze : 2 X, Silver : 2.5X & Platinum : 3X

Now a practical approach (an example)
Suppose I have a balance of 50000 in my trading account. And I already have a overnight position of 10 lots of CrudeM and used a margin money of say 46500. Now I can avail upto 50000 from you for my trades, free of any charges and 1L, 1.5L, 2L on payment of charges.

Yes. In your example, assume you have taken Platinum plan and have overnight position of 46500. Once you are back next day, please convert your position from NRML to MIS. Your margin block shall reduce to 9300 (46500/5). Since you have opening balance of 50,000 you can trade up to 2.5 L in MIS. In case you just want Basic Plan (2X free), your limits shall be released, once you convert to MIS in the morning.

If I am right in my thinking, then whom should I contact to avail this facility and do I have to make a request daily for such leverage or there is a way out.

Thanks

Hope this explains. You can request leverage directly from PRISM, however if you have further questions or need further help, please email to CS, Live Chat or reach your Account Manager.

Thanks

 

[Finvasia]

yes that is flat fee, but finvasia is charging interest which will be very high compared to flat fee based model

Hi soft_trader, Will appreciate if you please recalculate your current brokerage paid Vs our leverage charges to evaluate cost benefit analysis. Thanks

 

[Finvasia]

Quite relevant questions. Taking leverage everyday afresh and leverage with blocked margin scenario are very different.

The above example by Finvasia has made many things clear but indeed a few more queries have popped up. I hope they would reply to this query of yours'.

Hi RockyRobust, Please refer to the reply for quoted post and hope it explains all the points. Thanks !

 

[Finvasia]

Finvasia has combined it with zero brokerage. Not many would follow that

Anyway, does a customer has to apply EVERY SESSION for the leverage ? Or is it good till cancelled?

Hi timepass! You need to make one time request and the service shall continue every day until cancelled. Thanks

 

[Finvasia]

I am not getting the calculation. Please explain
In the last row
48000 x 13.5% = 6480 / 264 (no of days in a year considering 22 trading days per month avg ) = 25.54 you get 33 how ??

Hi bpr! Good to hear from you after a long time. We mentioned the average cost of trading. Though 1X is free, we have calculated on the total cost of funds used including free. Thanks

 

[Finvasia]

@Finvasia

I saw some miscalculation:-

2. Bronze Plan: 3X leverage -...On an annual basis this translates to 9% interest on the 2L of total Finvasia’s capital that you have borrowed.

Why 2 Lakh? It's only one lakh. With basic plan 2X leverage is free, mean 1 Lakh leverage is free.
So when u calculate 3X (by default 2X is free) then you are actually giving 1X additional leverage.
3X = 2X(BAISIC 1X+1X) + 1X(ADDITIONAL)
So, here actually 1L of total capital we have borrowed. Is not it?
You must calculate 9% on 1 Lakh finvasia capital with 3X leverage as by default 2X leverage is there for everyone as FREE.

Similarly, below other plan calculation are also miscalculated.

3. Silver Plan: 4X leverage – On an annual basis this translates to 12% interest on the 2L[NOT 3L as 2X or 2L is default basic free leverage there for everyone, 4X-2X=2X] of total Finvasia’s capital that you have borrowed.

4. Platinum Plan: 5X leverage – Likewise, you wish to invest 5L. On an annual basis this translates to 13.5% interest on the 3L[NOT 4L as 2X or 2L is default basic free leverage there for everyone, 5X-2X=3X] of total Finvasia’s capital that you have borrowed.

****************
Pls, explain If I am missing something. By default 1X extra intraday leverage is free of cost for all from finvasia.
But, then why you are charging for that basic 1X leverage again when we are applying for extra leverage?

Hi headstrong

Yes, for the Basic plan, first 1X is absolutely free. Once you move to higher plan, we calculate total cost of funds to investors. Hence, in case of Silver Plan (4X), say you have opening balance of 1 L, you shall get additional 3 L for trading (1X free and additional 2X as paid). Hence, total cost of funds is for 3X. We experience most of the investors are happy with 2X so any additional service is for traders and calculation is based on total leverage utilized. Hope this explains our point of view.

Thanks