All Participants in the SLBS shall be margined based on their transactions in the said segment. ICCL would compute, collect and release various margins as detailed below
The lend transaction shall be levied a fixed percentage of the lending price as margin. The fixed percentage will be 25% (as currently applicable), or as may be specified by ICCL from time to time. No margins will be levied on the lender in case of early pay- in of securities. The lend transaction shall also be subject to mark to market margin at end of day.
The borrow transactions shall be levied a fixed percentage of lending fees as margins on T day. The fixed percentage shall be 100% or as may be specified by ICCL from time to time.
The borrower shall be levied following margins on return leg of their borrow transactions
- Value at Risk (VaR) Margin
- Extreme Loss Margins(ELM)
- Mark to Market margins (MTM)
- Lending price (i.e. value of shares borrowed)
No margins shall be levied on the lender Participant in the return leg transaction.
VaR Margin and ELM Margin
- MTM margin shall be calculated, by marking each transaction in a security, to the closing price of the security, at the end of the day, in the Equity Cash segment of BSE. In case the security has not been traded on a particular day in the Equity Cash Segment, the latest available closing price at the BSE shall be considered as the closing price.
- MTM shall be collected every day at end of day on the gross open position of the Participant. The gross open position for this purpose would mean the gross of all positions across all the clients of the Participant including its proprietary position. For this purpose, the position of a client would be netted across its various securities and the positions of all the clients of a Participant would be grossed.
- Such MTM would be collected from the Participant in the evening, first by adjusting the same from the available cash and cash equivalent component of the Liquid Assets and the balance MTM in the form of cash from the Participant through their clearing banks on the same day.
- There would be no netting off of the positions and setoff against MTM profits across two settlements. However, for computation of MTM profits/losses for the day, netting or setoff against MTM profits would be permitted.
Participants may note that all end of day margin and other cash obligation need to be cleared by them before start of business on the next transaction day, failing which no fresh transactions would be allowed to be executed in the order matching platform.
- In respect of transactions entered by a Participant which is to be settled by a Custodian, the margins from the time of transactions till confirmation of same by the Custodian shall be levied on the Participant. On confirmation of the said transactions by the Custodian, the Custodian shall be levied the margins applicable on such transactions.
- In case of rejection by the Custodian, the margins on the transaction rejected shall continue to be levied on the Participant.
The exemption from margins would be given in cases where early pay-in of securities is made. Participants have the facility to do early pay-in of securities prior / after execution of the transaction pertaining to the respective leg.
The blocked margins, Lending Fees and Lending Price would be released on completion of Pay-in of respective leg of transactions and on early pay-in / early return of shares.
Participants shall maintain adequate liquid assets with ICCL at all points of time to cover their margin requirements. In case of shortfall in margin for borrower transactions, ICCL shall cancel the borrow transaction to the extent of margin shortfall as may be decided by it from time to time. The securities shall be returned to the lenders along with the lending fees.