What is a Retention Statement?
As per Running Account Settlement regulations, Geojit can retain a certain percentage of a client's total margin requirement and the balance (if any) will be paid out to the client's registered bank account.
| Segment | Retention % (pledge + cash margin) | If there is sufficient cash balance |
|---|---|---|
| Equity | 100% of contract amount + 225% of (VaR + ELM) | * Up to 100% of contract amount will be retained as cash. * A minimum of 50% of VaR + ELM will be retained as cash (even if there is pledge margin) |
| F&O | 225% of required margin (SPAN + Exposure margin) | A minimum of 50% of SPAN + Exposure margin will be retained as cash (even if there is pledge margin) |
If margin requirements are retained, brokers are required to send a Retention Statement including details of the statutory pay-out to the client's registered email ID.
Let us understand this better with an example.
Scenario A: The client has an open F&O position and only cash margins is his trading account.
| Particulars | Amount |
|---|---|
| Cash Balance (before margin) | Rs. 6,00,000 |
| Margin Requirement (for 3 lots of Nifty futures) | Rs. 2,50,000 |
| 2.25 Times the Margin | Rs. 5,62,500 (2.25 * Rs. 2,50,000) |
| Retention Amount | Rs. 5,62,500 |
| Settlement Payout | Rs. 37,500 (Rs. 6,00,000 - Rs. 5,62,500) |
Scenario B: The client has an open F&O position and both cash and pledge margins is his trading account.
| Particulars | Amount |
|---|---|
| Cash balance (before margin) | Rs. 5,00,000 |
| Pledge margin | Rs. 20,00,000 |
| Margin Requirement (for 3 lots of Nifty futures) | Rs. 6,00,000 |
| 2.25 Times the Margin | Rs. 13,50,000 (2.25 * Rs. 6,00,000) |
| 50% of Margin | Rs. 3,00,000 (Rs. 6,00,000 * 50%) |
| Retention Amount | Rs. 3,00,000 |
| Settlement Payout | Rs. 2,00,000 (Rs. 5,00,000 - Rs. 3,00,000) |
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