What is the rate of margin penalty charged by the exchange?
As per exchange norms, penalties are levied on margin shortages. This is applicable for positions in both the equity and F&O segments.
| Short Collection (per client) | Penalty (%) |
|---|---|
| Less than Rs. 1 lakh AND less than 10% of the margin requirement | 0.5% |
| Less than Rs. 1 lakh AND more than 10% of the margin requirement | 1% |
| Greater than or equal to Rs. 1 lakh | 1% |
In addition:
1. In case there is a shortfall for more than 3 consecutive days, a 5% penalty is charged per day (from the 4th day) on the shortfall amount.
For example, Mr Rahul has a futures long position in Infosys which requires a margin of Rs. 1,00,000. He has a fund balance of Rs. 1,10,000 in his trading account.
While his position is open, the exchange increases the margin requirement for this position to Rs. 1,20,000. Mr Rahul fails to bring in additional margins to cover this requirement, as per the intimated margin call.
| Day | Margin Requirement | Margin Shortfall | Penalty |
|---|---|---|---|
| 1 | Rs.1,20,000 | Rs. 10,000 | Rs. 50 (0.5%) |
| 2 | Rs.1,20,000 | Rs. 10,000 | Rs. 50 (0.5%) |
| 3 | Rs.1,20,000 | Rs. 10,000 | Rs. 50 (0.5%) |
| 4 | Rs.1,20,000 | Rs. 10,000 | Rs. 500 (5%) |
- Considering day 1 as the day from which the margin requirement was changed, we see that Mr. Rahul has failed to bring in additional margins for 4 consecutive days.
- For days 1-3, he will be charged Rs. 50 as penalty per day- penalty charges are 0.5% as the shortfall is less than Rs. 1 lakh AND less than 10% of the margin requirement.
- From day 4, he will be charged 5% (Rs. 500) per day, as he has had a shortfall for more than 3 consecutive days in his account.
2. In case there is a shortfall for more than 5 days in a month, a 5% penalty is charged per day (from the 6th day) on the shortfall amount.
For example, Mr Rahul has a futures long position in Infosys which requires a margin of Rs. 1,00,000 for which he has a fund balance of Rs. 1,10,000 in his trading account.
While his position is open, the exchange changes its margin requirements. Mr Rahul fails to bring in additional margins to cover these requirements, as per the intimated margin call.
| Day | Margin Requirement | Margin Shortfall | Penalty |
|---|---|---|---|
| 1 | Rs. 1,20,000 | Rs. 10,000 | Rs. 50 (0.5%) |
| 3 | Rs. 1,15,000 | Rs. 5,000 | Rs. 25 (0.5%) |
| 4 | Rs. 1,15,000 | Rs. 5,000 | Rs. 25 (0.5%) |
| 10 | Rs. 1,15,000 | Rs. 5,000 | Rs. 25 (0.5%) |
| 13 | Rs. 1,20,000 | Rs. 10,000 | Rs. 50 (0.5%) |
| 14 | Rs. 1,15,000 | Rs. 5,000 | Rs. 250 (5%) |
- For days 1-13, penalty charges are 0.5% as the shortfall is less than Rs. 1 lakh AND less than 10% of the margin requirement.
- From day 14, he will be charged 5% (Rs. 250) per day, as he has had a shortfall for more than 5 days in the month in his account.
- This example assumes that on days not mentioned in the table (2, 5-9, 11,12), Mr. Rahul had sufficient funds in his trading account to cover the margin requirements for each day.
* If the margin shortfall in a client's account is caused by a movement of 3% or more in the NIFTY50 (taken from close to close) in a given day (T), the penalty is imposed only if the margin shortfall continues to T+1.
* 18% GST is applicable on the penalty amount.
* Geojit does not charge additional penalties on margin shortages. The penalty debited in a client's account is as per what Geojit is charged by the exchange for the concerned client.
* To avoid penalties, clients are advised to maintain sufficient margins.Still need help? Create Ticket
