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    Types of Margin

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    Ashvika JM
    This document discusses types of margin, specifically mark to market (MTM) margin. MTM margin is calculated daily by marking open positions to the most recent closing price. MTM losses are collected from members before the next day's trading to cover potential losses. Positions are not netted across multiple days, but can be within a single day. The MTM margin collected from brokers is the total gross loss across all clients, without offsetting gains of one client against losses of another.

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    Types of Margin

    Uploaded by

    Ashvika JM
    57 views10 pages
    This document discusses types of margin, specifically mark to market (MTM) margin. MTM margin is calculated daily by marking open positions to the most recent closing price. MTM losses are collected from members before the next day's trading to cover potential losses. Positions are not netted across multiple days, but can be within a single day. The MTM margin collected from brokers is the total gross loss across all clients, without offsetting gains of one client against losses of another.

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    This document discusses types of margin, specifically mark to market (MTM) margin. MTM margin is calculated daily by marking open positions to the most recent closing price. MTM losses are collected from members before the next day's trading to cover potential losses. Positions are not netted across multiple days, but can be within a single day. The MTM margin collected from brokers is the total gross loss across all clients, without offsetting gains of one client against losses of another.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    57 views10 pages

    Types of Margin

    Uploaded by

    Ashvika JM
    This document discusses types of margin, specifically mark to market (MTM) margin. MTM margin is calculated daily by marking open positions to the most recent closing price. MTM losses are collected from members before the next day's trading to cover potential losses. Positions are not netted across multiple days, but can be within a single day. The MTM margin collected from brokers is the total gross loss across all clients, without offsetting gains of one client against losses of another.

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    TYPES OF MARGIN

    Mark to market (MTM) margin


     Mark to market loss is calculated by marking each transaction in
    security to the closing price of the security
    at the end of trading.

    In case the security has not been traded on a particular day, the latest
    available closing price at the NSE is to be considered as the closing
    price.

    In case the net outstanding position in any security is nil, the


    difference between the buy and sell values is considered as notional
    loss for the purpose of calculating the mark to market margin payable
    • The mark to market margin (MTM) is collected from the member
    before the start of the trading of the next day.

    The MTM margin is collected/adjusted from/against the cash/cash


    equivalent component of the liquid net worth deposited with the
    Exchange
     The MTM margin is collected on the gross open position of the
    member.

    The gross open position means the gross of all net positions across all
    the clients of a member including its proprietary position.

    For this purpose, the position of a client would be netted across its
    various securities and the positions of all the clients of a
    broker would be grossed.
    • There would be no netting off of the positions and setoff against MTM
    profits across two rolling settlements i.e. T day and T-1 day.

    However, for computation of MTM profits/losses for the day, netting


    or setoff against MM profits would be permitted.
     In case of Trade for Trade Segment (TFT segment) each trade is
    marked to market based on the closing price of that security.

    The MTM margin so collected is released on completion of pay-in of


    the settlement.
     For a Client A, his MTM profit/ loss would be calculated separately for
    his positions on T-1 and T-day (two
    different rolling settlements).

    For the same day positions of the client, his losses in some securities
    can be set off/netted against profits of some other securities.

    Thus, we would arrive at the MTM loss/profit figures


    of the two different days T and T-1.

    These two figures cannot be netted.

    Any loss will have to be collected and same will not be set-off against
    profit arising out of positions of the other day.
    • Thus, as stated above MTM profits / losses would be computed for
    each of the clients; Client A, Client B, Client
    C, etc.

    As regards collection of margins from the broker, the MTM would be


    grossed across all the clients i.e. no setoff of loss of one client with the
    profit of another client.

    In other words, only the losses will be added to


    give the total MTM loss that the broker has to deposit with the
    exchange. In this example, the broker has to deposit MTM Margin of
    Rs. 2000.
    DONE BY:
    ASHVIKA
    ROMA
    XII D

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