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…
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.…
REGULATORY FRAME WORK The trading of derivatives is governed by the provisions contained in the SC(R)A, the SEBI Act, the regulations framed the reunder and the rules and bye-laws of stock exchanges. In this chapter we look at the broad…
QUESTIONS AND ANSWERS ON CHAPTER Q. In Futures Trading, the profits are received or losses or paid 1. In the delivery month 2. On daily settlement 3. On the day of expiry of the contract 4. On a weekly settlement basis. A. The correct…
TYPES OF MARGINS The Margin system for Futures and Options segment of NSE is explained below: INITIALMARGIN: Initial margin in Futures and Options segment is computed by NSCCL upto client level for open positions of CMs/Tms. These are required to be…
RISK MANAGEMENT NSCCL has developed a comprehensive risk containment mechanism for the Futures and Options segment. The salient features of risk containment mechanism on the Futures and options segment are: The financial soundness of the members is the key…
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…
SETTLEMENT OF FUTURES CONTRACTS All futures contracts for each member are marked-to- market (MTM) to the daily settlement price of the relevant nifty future contract at the end of each day. The profit/losses are computed as the difference between: 1. The trade price and the…
CLEARING MECHANISM The clearing Mechanism essentially involves working out open positions and obligations of clearing (Self clearing/trading-cum-clearing/professional clearing) members. This position is considered for exposure and daily margin purposes. The open positions of CMs are arrived at by aggregating the…
CLEARING BANKS Funds Settlement takes place through clearing Banks. For the purpose of settlement all clearing members are required to open a separate ban k account with NSCCL designated clearing bank for Futures and Options segment. The clearing and settlement…