Risk Management Policy- Equity

Transcription

1 Risk Management Policy- Equity This risk management policy document has been designed to understand the margin policies of the company in the Equity trading segment. Risk Management is an integral part of any organization. Various risks include credit Risk, Market Risk, default Risk, liquidity Risk and other risk. With a view to enhance customer knowledge and safeguard investor interests, Navia has devised a comprehensive Risk Management & Surveillance (RMS) Policy to make sure that customers are aware of the criteria based on which Navia monitors risk and initiates actions to safeguard the interest. Margins Margin is the minimum amount required to buy / sell equity in the future segments of the equity segment. Margins are collected in advance. Various margins applicable are: 1. Span margins (This varies from stock to stock. Use our margin calculator to find out the margins for various stocks.) 2. Additional/ Exposure Margins. Trading Platform and product codes The trading software used for trading is NOW, i.e Neat on Web and different products type for trading are MIS Intraday Margin Span/2 (Square off) NRML Normal Product - 1 Time span. CO - Cover Order - 3% of contract value Product Span Exposure Margin MIS 50% 50% NRML 100% 100% CO 3% contract value Stop loss price upto 3% compulsory Intraday Margin scrip details

2 1. MIS Equity - Exposure 10 times ( All F&O scrip) 2. MIS Futures - Span /2 (All futures contracts ) 3. MIS Options - Span/2 ( only on the Option selling ) 4. MIS - currency - Span/2 ( All currency contracts Cover Order Cover Order provides intraday margin benefits with compulsory stop Loss order and thereby maximum loss can be minimized. 1. Equity CO 3% of the contract value ( All F&O Stocks) 2. Futures CO 3% of the contract value (All futures contracts ) Any order placed under MIS and CO, will automatically be squared off after 3.00 PM i.e is within half an hour before the market closes or the Intraday MTM reaches 80% whichever is earlier. Also the client can convert an MIS order to normal order (NRML) if adequate margin is available in the trading account. Intraday Margin Exceptions Navia shall reduce the intraday (MIS/CO) leverage margin at any time, during the trading day or on any special day where Navia anticipates higher volatility in the market due to any of the following reasons: Exchange policy changes or regulation Government policy changes or regulation Stock broker 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. last half an hour session of the normal market trading time, whichever is earlier.

3 3. CO Auto Square off It is auto square off product and the positions will be squared off automatically if the Stop Loss triggers. Further if the stop loss is not triggered the system will automatically square off the entire position after canceling the pending order, at the last half an hour session of the market trading. 4. 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. Navia 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. Navia 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. 1. Navia shall square off all intraday positions within the last half an hour session of the trading, if not squared off by the clients. 2. Navia shall not allow carrying forward the positions taken under the MIS intraday product. 3. Navia shall not provide any intraday adhoc margin other than the credit balance uploaded as base capital. 4. Clients are permitted to convert the product from MIS to NRML with the available margin on or before 3pm. 5. Navia has limited the single order value to 5 Crores in the F&O segment and the quantity in the equity cash segment is to shares. 6. Navia shall square off the House account position on 7th day, if payments are not received or the credit coverage reduces to 110%, whichever is earlier. 7. Navia shall monitor the Credit Coverage Policy, considering the total value of the approved stocks after applying the necessary hair cut. 8. Navia shall not allow trading in the illiquid scrips as specified by the exchange for the trading in the Options segment. Delayed Payment Penalty charges. Navia shall charge the client with the delayed payment (p.a.) for the short margin on T+1 day onwards.

4 Exchange margin shortfall penalty If at any time, the Exchange impose margin 1%or 5% (as per the number of days) on the total margin shortfall in the futures and segment trades, Navia shall pass this penalty amount to the client s respective trading accounts. Other Surveillance Actions: i) Regulatory conditions under which a client may not be allowed to take further position or Navia 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 Navia from time to time. iv) Suspending Client s trading account: Navia 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). V) Dormant Account: If the client has not traded in any particular segment for a period of 90, days, (not traded > 3 months), the account will be treated as dormant account and shall suspend the account from further trading. Vi) Graded Surveillance Measures. In order to enhance market integrity and safeguard the interest of the investors, SEBI has introduced the Graded Surveillance Measures (GSM) on securities that witness abnormal price rise, which not commensurate with the net worth and fundamental s of the company. Navia as a measure, shall block all these Securities as per the GSM list on a regular basis, and shall not allow the clients to take fresh Positions but allow the clients to liquidate these securities if any holding in the account.

5 Communication Client can view details of his ledger, margin, shortfall etc through his secured login portal on Navia website or by logging to the Mobile App, and the client has to be aware about his position, outstanding balance and Risk on the holding positions. Further, Navia 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 / id s registered with Navia. Disclaimer Navia will have a discretion to alter/change any of the 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. =====================================================================