Risk Management Policy- Equity
This risk management policy document has been formulated to understand the margin policies of the company in the Equity trading segment. Risk Management is an integral part of any financial organisation. Various kind of risk which have been stipulated and narrated by the regulators include Credit Risk, Market Risk, default Risk, liquidity Risk and other risks.
With a view to update customer knowledge and protect investor interests, AMBALAL(PROFIT PLUS ) has devised a comprehensive Risk Management & Surveillance (RMS) Policy to make sure that customers are aware of the criteria based on which AMBALAL(brand:PROFIT PLUS) monitors risk and initiates actions to safeguard the interest.
Margin is the minimum amount stipulated by the respective stock exchanges that are required to buy/sell a equity in the future segments of the equity segment. Margins are collected upfront. Types of margins that are stipulated for any exchange based transactions are:
- Span margins (This varies from stock to stock. Use our margin calculator to find out the margins for various stocks.)
- Additional/ Exposure Margins.
Trading Platform and product codes
The trading software used for trading is NOW, i.e Neat on Web and also NEST of Thomson Reuters.
different products type for trading are ……
MIS – Intraday Margin – Span/2 (all trades would be squared off compulsorily on the same day)
NRML – Normal Product – 1 Timespan.
Product Span Exposure Margin
MIS 50% 50%
NRML 100% 100%
Intraday Margin scrip details
- MIS – Equity – Exposure 10 times ( Nifty 50 & Midcap 50 scrip)
- MIS – Futures – Span /2 (All futures contracts )
- MIS – Options – Span/2 ( only on the Option selling )
- . MIS – currency – Span/2 ( All currency contracts)
Intraday Margin Exceptions
Intraday Margin may be reduced on certain days due to any of the following reasons:
- Exchange policy changes or regulation
- Government policy changes or regulation
- Stockbroker internal policy changes
- Excessive or abnormal market movement / turnover / volatility
RMS Selling/Square off criteria :
1. Mark- to Market (MTM) square off –
If the MTM reaches 80%, the RMS shall square off the position, including the all open positions, and the client shall be in square off mode.
2. MIS -Auto Square off
RMS shall square off the positions under this product, if the Mark to Market Loss reaches 80% or at the set time i.e fifteen minutes before the close of the session of the normal market trading time, whichever is earlier.
3. Margin Shortfall – Square off for the carry forward positions.
RMS, shall square off the positions, if margin shortfall reaches 140% for the carry forward positions, and the client has not made the payment towards the margin shortfall.
AMBALAL (profit Plus)shall not be liable for any loss arise due to RMS selling on non -payment as well as loss in case where RMS Selling may not be done as per the above square off policy, due to any reason.
AMBALAL (Profit Plus) reserves the right to change the above policies at any time in general or in particular case within the Exchange guidelines
What are the Risk Parameters measured by the RMS for monitoring the Positions.
- AMBALAL shall square off all intraday positions within the last fifteen munutessession of the trading, if not squared off by the client
- AMBALAL shall not allow carrying forward the positions taken under the MIS intraday product.
- AMBALAL shall not provide any intraday adhoc margin other than the credit balance uploaded as base capital.
- Clients are permitted to convert the product from MIS to NRML with available margin.
- AMBALAL has limited the single order value to 1 Crore.
- Ambalal shall limit and upload the base capital to 20 lakhs in client cash margin, even though the clients’ are having more margin in the account.
- AMBALAL shall square off the House account position on t+5 day, if payments are not received or the credit coverage reaches below 110%, whichever is earlier.
- Ambalal shall monitor the house account shares with our credit coverage policy for holding in the house account.
Delayed pavement penalty charges
AMBALAL shall debit the client with the delayed payment interest @21% (p.a.) for the short margin on T+2 day onwards.
Exchange margin shortfall penalty
Exchange shall impose 1%or 5% (as per the number of days) on total margin shortfall as penalty and this amount will be debited client trading account.
Other Surveillance Actions:
i) Regulatory conditions under which a client may not be allowed to take further position or AMBALAL may close the existing position of the client:
In case overall position in a contract has reached the Regulators prescribed Exchange limit/ Market wide open interest limit / then client may not be allowed to take further positions, till such time Regulators prescribed limit comes down to create a new position.
ii) PMLA Guidelines:
Client will be categorized as High, Medium and Low-risk customer as per their risk appetite and their current profile as mentioned in Know your client form (KYC). The same will be reviewed at regular intervals.
iii) Exposure to client may also be governed by customer profiling mentioned above as well as clients financial income made available to AMBALAL (profitplus) from time to time.
iv) Suspending Client’s trading account
AMBALAL may withhold the payout of client and suspend his trading account due to any internal surveillance (if client indulges into manipulative trade practice) / regulatory orders (debarring orders) / if the client is dormant (not traded > 6 months).
Client can view details of his ledger, margin, shortfall etc through his secured login portal on AMBALAL website and the client has to be aware about his position, outstanding balance and Risk on the holding positions. Further, AMBALAL is under no legal obligation to send any separate communication other than the contract note and margin details and these shall be communicated through SMS / Email id’s registered with AMBALAL
AMBALAL will have a discretion to alter/change any of Exposure limit, selling parameter defined in this policy on the basis of prevailing market conditions with or without prior intimation and can use their discretion to grant any kind of exemption/permission in case they deem fit on case to case basis.