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Why Should Clients Maintain Funds to Cover Margin Shortfalls?

Post Date : May 16, 2025

When a trader’s account shows a margin shortfall, it means there aren’t enough funds to support the open positions. If this shortfall is not addressed in time, it can lead to penalties, restrictions, or even the forced closure of positions.

Let’s understand why it’s crucial to transfer funds on time and the consequences of failing to do so.

What is a Margin Shortfall?

A margin shortfall occurs when the available margin in your trading account is lower than the required margin needed to maintain your open positions. This typically
happens due to:

• Sudden market volatility
• Decline in the value of your holdings
• Increase in margin requirements by the exchange
• Losses from open positions

Why Add Funds before the Deadline?
Clients are required to add funds to their RMoney account by 11:59 PM on the same trading day in case of a margin shortfall. Timely action helps avoid:

1. Margin Penalty
The exchange may impose a margin penalty for shortfalls in non-upfront (post-trade) margins. These penalties can increase with the extent and frequency of the shortfall.

Note: Even a small delay in covering margin can attract penalties based on SEBI guidelines.

2. Increase in Margin Requirements

If your account consistently reflects a negative balance or shortfall, RMoney may impose stricter margin requirements for placing new trades. This can reduce your
leverage and limit your ability to take positions in the market.

3. Forced Square-Off of Open Positions

To protect you and maintain regulatory compliance, RMoney reserves the right to square off your open positions—especially in F&O or intraday segments—if the
required margin is not maintained.

This is done to reduce risk exposure and prevent further losses.

Conclusion

Margin shortfalls can have serious financial implications. Ensuring that your account is adequately funded before the end of the trading day helps you:

• Avoid penalties
• Prevent forced square-offs
• Maintain trading flexibility
• Minimize extra brokerage charges

Being proactive with margin management is key to sustainable and disciplined trading.

Need Help?
Contact RMoney at 0562-4266600 / 0562-7188900 or email us at
askus@rmoneyindia.com