Risk
Management Policy for Capial Market (CM), Futures
and Options :
BACKGROUND :
M.
P. Vora Shares & Securities Pvt. Ltd. a Trading
Member of National Stock Exchange of India Ltd
(NSE) on CM and F&O segments, Bombay Stock
Exchange Ltd. (BSE) on CM and F&O segments
segment. As per the requirements of Exchanges
and SEBI, the company has designed a risk management
policy for extending trading facilities to its
clients and in the respective segments of the
exchanges.
POLICY
:
The
Company shall on its discretion and as per the
requirements of the Governing and Regulatory Bodies
collect Initial, Exposure, SPAN and Mark to Market
margins from the clients from time to time for
their intended trading activities. The Initial
Margin is compulsorily payable upfront for any
trades to be executed on the F&O segment as
per the prescribed rates of the respective Stock
Exchanges. In addition, the margins so collected
can be topped up as required and exposures of
the clients so be adjusted that can vary from
client to client on the basis of past experience
of the Company with the client. For the CM (Cash)
segment the company would collect margins within
the prescribed limits based on the internal risk
assessment of the client.
However
at no point in time the client would be required
/ asked to maintain / pay margins in excess of
the amount as prescribed/calculated and levied
by the exchange on the Gross Open positions of
the clients. The client may be allowed to maintain
additional amounts with the company to be used
by them for any future exposures and any unused
amount can be called by the client as and when
he wishes to do so.
The
Company shall on its discretion accept non-cash
component (as approved and prescribed by the respective
exchanges with any applicable haircuts) from the
client as a percentage of the cash component that
may add-up to make the capital and the same can
vary from client to client, based on the past
experiences. The company is allowed to take the
above decisions and the same is monitored by the
RMS Software being used by the company.
RISKS
CONTROL :
The
client is given a composite exposure for all exchanges
and all segments for which he is enrolled. The
available capital calculated as per the policy
mentioned above is allocated based on the flow
of orders/execution of trades as placed by the
clients, so as to do optimal utilization of the
available capital.
The
trading rights of the clients for all exchanges
and all segments shall cease once the client utilizes
100% of the allocated exposure unless he provides
additional capital by way of transfer of funds
to the designated bank accounts of the company
and further he would be intimated to reduce exposures
on MTM reaching 50% to the capital computed for
exposure calculation, and he would be repeatedly
informed till MTM of 75%.
Upon
the MTM reaching 75% of the capital loss, the
company may at its discretion square off 50% of
the positions on random basis, subject to client
not infusing clear funds to its capital requirements
and/or to cover its loss. Upon the MTM reaching
95% of the capital loss, the company may at its
discretion square off the entire positions, subject
to client not infusing clear funds to its capital
requirements and/or to cover its loss.
In
case of the benchmark points being breached on
previous days open positions in any of the exchange
or segments the company can square off the positions
as mentioned above and also sell any additional
securities available so as to cover up the losses
only, under no circumstances the company would
sell exceeding 3% of the debits to be covered.
All these are subject to client not infusing clear
funds to its capital requirements and/or to cover
its loss.
In
case of clients who undertake delivery based transactions
on the CM segment and fail to make payments or
deliver shares within the pay-in due date the
company would have a right to hold back earlier
settlement payouts of funds and /or securities
to cover up for the losses that may be incurred
because of the close-out/sale of securities that
are unpaid for. However penalty / delayed payment
charges @ 18 % p. a. (depending upon prevalent
market rate) to be charged The above guidelines
can vary and/or may be altered based on clients
relationships, at the sole discretion of the Company.
SYSTEMIC
CONTROL AND CLIENT CLASSIFICATION :
The
clients’ shall be classified as low, medium
and high risks, based on the information captured
through the KYC, client trading patterns, past
experiences of the company with them and on their
funds flow system. The same shall be as per the
internal control and assessment system of the
Company, this information would be kept confidential
and would be accessible only to the authorized
personnel only.
RESTRICTION
OF TRADES IN ILLIQUID SECURITIES/ PENNY STOCKS
:
The
RMS department/cell of the company would adopt
a stringent policy for allowing trades in Illiquid
Securities/ Penny stocks. Generally the orders
placed for any securities classified as Illiquid
Securities/Penny stocks from time to time. The
company reserves the right to refuse undertaking/placing
orders in such stocks classified as Illiquid securities
/ penny stocks without assigning any specific
reasons. A list of Illiquid securities is given
by the respective exchanges every month and the
company would update its system for Illiquid Securities
/ Penny Stocks from the latest list available.
Same can be accessed from the website of www.bseindia.com
and www.nseindia.com.
