ACCOUNTING AT THE INCEPTION 0f THE CONTRACT Every client is required to pay to the trading member/ clearing member, the initial margin determined by the clearing corporation as per the bye-laws/regulations of the exchange for entering into an equity index futures contracts. Such initial margin paid/payable should be debited to “Initial Margin – Equity Index futures account”. Additional margins, if any, should also be accounted
REPORTING OF CLIENT MARGIN Clearing Members and Trading Members are required to collect upfront initial margins from all their Trading Members L constituents. Clearing members are required to compulsorily report, on a daily basis, details in respect of such margin amount due and collected, from the Trading Members/Constituients clearing and settling through them, with respect to the trades executed and open positions of the
CLIENT LEVEL POSITION LIMITS The gross open position for each client, across all the derivative contracts on an underlying, should not exceed 1 % of the free float market capitalization (in terms of number of shares) or 5% of the open interest in all derivative contracts in the same underlying stock (in terms of number of shares) whichever is higher. MARKET WIDE POSITION LIMITS The market wide limit of open position (in terms of the number of underlying plus
FORMS OF COLLATERALS ACCEPTARLE AT NSCCL Members and dealers, authorised dealer have to fulfill certain requirements and provide colleteral deposits to become members of the Future and Options segment. All colleteral deposits are segregated into cash component and non-cash component. Cash component means cash, bank guarantee, fixed deposit receipts. T-Bills and dated government securities. Non cash component means all other forms of colleteral deposits
EXERCISE SETTLEMENT Although most option buyers and sellers close out their options positions by an offsetting closing transaction, an understanding of exercise can help an option buyer determine whether exercise might be more advantageous than an offsetting sale of the option. There is always a possibility of the option seller being assigned an exercise in stock market. Once an exercise of an option has
CLEARING AND SETTLEMENT National Securities Clearing Corporation Limited (NSCCL) undertakes clearing and settlement of all trades executed on the Futures and Options Segment of the NSE. It also acts as legal counter party to all trades on the Futures and Options segment and guarantees their financial settlement. CLEARING ENTITIES Clearing and Settlement activities in the F&O segment are undertaken by NSCCL with the help
FUTURES TERMINOLOGY SPOT PRICE: The price at which an asset trades in the spot market. FUTURES PRICE: The price at which the futures contract trades in the futures market. CONTRACT CYCLE: The period over which a contract trades. The index futures contracts on the NSE have one month, two months and three months expiry cycles which expire on the last Thursday of the month.
A stock market is a trading place for buys & sale of company stock/ shares, and derivatives, securities listed on a stock exchange as well as those only traded privately. Market is a place where buyers and sellers can enter into transactions to buy and sell shares, bonds, debentures etc. Now days through Internet and advanced technology buying and selling of shares take place
An investor does not get any protection if he trades outside a stock exchange. Trading at the exchange offers investors the best prices prevailing at the time in the market, lack of any counter-party risk which is assumed by the clearing corporation, access to investor grievance and redressal mechanism of stock exchanges, protection up to a prescribed limit, from the Investor Protection Fund etc.
What precautions must one take before investing in the secondary stock markets? Here are some useful pointers to bear in mind before you invest in the markets: Make sure your broker is registered with SEBI and the exchanges and do not deal with unregistered intermediaries. Ensure that you receive contract notes for all your transactions from your broker within one working day of execution