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According to SEBI circular dated 19th Nov, 2019, all the brokers are now required to collect and report margins in the cash segment. This is currently applicable in the derivatives segment. A flat 20% upfront margin needs to be collected in the cash segment. Let’s find out the reason why SEBI made this move. Earlier brokers allowed clients to buy/sell stocks for delivery without asking them for upfront margins or delivery. The client was required to fund the account untilRead More
If the shares are not bought in the auction, the close-out is done by paying compensation to the buyer. A payment equivalent to any of the following is made: The value of the short delivered security at the highest price prevailing in the stock exchange from the day of trading till the auction day or 20% above the official closing price on the auction day, whichever is higher is paid. For all short deliveries for; Companies listed in the “ZRead More
According to the exchange rules, the auction amount is always debited to the auction seller. It is the seller who is liable for fulfilling the shares’ obligations. If you wish to avoid such situations, it is advisable to sell the shares after confirming the delivery of shares. There are always chances that the shares may come short.Read More
Scenario1- Internal Process As Per T+2 Basis Internal short settlement is a special case scenario wherein both, the buyer and the seller, belong to the same broker. In such a case, the short delivery is settled internally by the broker. The settlement here is done among the broker’s clients instead of the exchange through a buy-in auction. If there is any short delivery, the funds will be credited to the buyer against shares and funds will be debited to theRead More
Bonus shares are the additional shares offered by a firm to its existing shareholders as a “bonus”. This is done when the company is not in a position to pay dividends to its shareholders despite earning decent profits for that particular quarter. Allotments are typically made in a fixed ratio e.g. 1:1, 2:1, 3:1, etc. A 2:1 bonus ratio means the existing shareholders (as on the record date) will get 2 additional shares for every 1 share held at zeroRead More
A stock split is one of the ways of increasing retail participation and is a quite common phenomenon in the stock market. A stock split is a firm’s process of dividing the existing shares into multiple shares to increase the number of outstanding shares held by a company. An illustration will make things clear: Split Ratio Old FV No of the shares held before split Share Price before split Investment Value before split New FV No. of shares held afterRead More
Issuing rights shares is yet another way companies turn to, for raising the required capital. Through a rights issue, companies grant shareholders the rights, but not the obligation, to buy new shares. Shareholders get the new shares at a discounted market price in proportion to their existing shareholding. Why Do Companies Go For Right Issues? Companies need capital for expansion and hence turn to the issue of shares. Instead of issuing shares to the public at large and diluting theRead More
Share buyback/ repurchase is when a company buys back its own shares from the existing shareholders. Share Buyback is an alternative, tex efficient way to return money to shareholders. There are two ways to buyback shares: Companies can buyback shares from the open market over an extended time period, or they may present a tender offer to shareholders. Here, shareholders have an option to submit (or tender) a portion or all of their shares within a certain time frame atRead More
An Offer For Sale (OFS) is an easier way to sell shares through the exchange platform for listed businesses. It is a simpler method where the promoters of public companies can sell their shares and reduce their holdings. Anyone including retail investors, FIIs (Foreign Institutional Investors), companies, and Qualified Institutional Buyers (QIBs) can bid on these shares. The OFS facility is available on the BSE and NSE. Only the top 200 companies by market capitalization in any of the fourRead More
As per the SEBI circular, F&O positions in all F&O stocks mentioned will be settled via compulsory physical delivery. If you hold any position in any of these contracts at expiry, you will be required to give/take delivery of stocks Previously settlement used to be Cash-based wherein there was no obligation of securities receivable/deliverable.Read More
Dear Client, We would like to inform you that as per Exchange Circular: SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95, the actual settlement of funds needs to be done at our end at least once in a calendar quarter, depending on the preference of the client’s account. For the same purpose “Running Account Authorization” is included in the account opening form. This routine process is to comply with SEBI compliance. For further clarification, kindly refer enclosed MCX Circular (page no 25).Read More
As per Exchange Circular: MIRSD/SE/Cir-19/2009 dated 03.12.2009, the actual settlement of funds and securities needs to be done at our end at least once in a calendar quarter, depending on the preference of the client’s account. For the same purpose “Running Account Authorization” is included in the account opening form. This routine process is to comply with SEBI compliance. With reference, the same payout of available funds and securities has to be issued to the client and the account needsRead More
As per the SEBI circular dated June 16, 2021, For the clients having a credit balance and who have not done any transaction in the 30 calendar days since the last transaction, the credit balance shall be returned to the client by a trading member. Kindly refer to this LINK for exchange and SEBI circular. Note– Kindly note that after settlement if you have transferred funds back to your trading account and not traded then again funds will be transferred backRead More
SEBI has, from time to time, put in place various risk containment measures to address the risks involved in the cash and derivatives market. With a view to keeping up pace with the changing market dynamics and bringing more efficiency to the risk management framework, a comprehensive review of the margin framework was done and SEBI and Exchange have come up with new norms which can be checked from the following links NSE and SEBI Highlights No major changes in Cash Segment margins. MarginsRead More
From December 1, 2020, the concept of peak margin reporting will be introduced. This will have a big impact on the intraday margin/limit that customers enjoy currently along with other changes. In this article, we shall first explain what the concept of peak margin means, and then examine how the Securities and Exchange Board of India’s (Sebi) new rules (introduced through circular dated July 20, 2020) will impact stock market participants. The concept of peak margin will apply to allRead More
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