Framework Content & Area’s to be Covered

    • Objectives & Key roles
    • Client Cash / Pay-in & Pay-out
    • Margin & Exposure
    • Surveillance & Mark-to-Market Square-OFF
    • Derivatives Expiry & Compulsory Delivery
    • MCX / Commodity Tender & Physical Delivery
    • Equity Settlement Obligations & Corporate actions
  •           Debt Recovery Mechanism

Objective& Key Roles

In capital market risk management is one of the most important aspects to avoid any future financial risk; it becomes important and a mandate to manage risks effectively as it not only affects the organization but it also affects their clients. It is a practice which is required and followed by every business irrelevant of their size and nature. It aims at recognizing the potential threats in advance and takes all necessary steps to avoid their adverse effects on business operations. The framework which is created is effectively & commonly applicable for all clients. Its clearly understood that risk is a integral part of any financial system, hence policy frameworks are mandatory to make it efficient and robust. Guidelines would also help in fixing margin irregularities if any.Also the guidelines are tentative & subject to change without notice based on market scenario.This framework will contain all the integrated business products of our company & all exchange segments like viz., Equity / Equity Derivatives / Commodity Derivatives / Currency Derivatives / Mutual Funds / Depository Regulations etc. Its very important for a investor or a Business partner to know about policies bought forward by Exchange & Regulators to mitigate risk involved. Therefore via this the client should be able to decide or bifurcate & invest his / her hard earned money in light to the financial condition. Client’s & Business partners are requested to strictly abide to the market regulations & Broker policy frameworks to avoid any future inconveniences.

A high percentile of importance have been given for Derivatives Segment in this framework. It must be acknowledged and accepted that there can be no guarantee of profits or no exception from losses while executing orders for purchase and/or sale of a derivative contract being traded on Stock exchanges.

Key Roles

Identify & Evaluate.
Streamline process accordingly to the environment.
Reduce & Eliminate Harmful threats.
Ensure service reach to end consumer.
Support Efficient utilization of resources.
Better communication of risk with desired authorities & Business partners.
Assurance of smooth fullness in business.
Effective control over business.

Client Cash

Its nothing but the clear cash balance available in the client’s ledger after detection of certain charges like “VIRTUAL BLOCK” etc,. Remember Zebu uses SINGLE MARGIN concept of margining a very unique & best in Industry. The single margin concept auto adjusts all the available margin in client ledger and it ensures equal distribution of funds in different segments accordingly to the Bills & JV’s posted.

Pay-in

Zebu facilitates client’s pay-in with the latest state of art technologies including private Broker payment Gateway services etc. Zebu uses a robust & unique technology in this case. Remember your payment’s made via ATOM (Application payment gateway ) IMPS / RTGS / NEFT / ECMS will get auto-credited within few min after KYC validation & Bank servers ensure completion of the transactions.

Bank transfers from banks which are under RBI guideline’s and registered under them are only accepted. No Cash Deposits / Money Transfer’s (Private Transfer agents ) & DD’s favoring the company are accepted. Its important to make a note that payment’s made from banks other than the registered bank account as per KYC will be termed as “THIRD PARTY PAYMENT” and reversal will be initiated only to the source account in case of online payment & KYC registered bank account in case of CASH DEPOSITS made, also note TAT time for reversal will be T+3 days & its chargeable.

Cheque deposits & Private UPI application payment’s are also accepted.

Tickets can be created with our payment’s ticketing mechanism if payment transfer like viz., IMPS / RTGS / NEFT / ECMS is not credited within 15 – 30 min of the transaction completion. Note – Tickets are mandatory for uncredited payments & UPI’s / Cheque in which proof payment has to be attached containing the account number which is used by the PAY-IN team to validate the payment.

Please Raise your tickets on payin@zebuetrade.com

Pay-out

You can reach us via our support numbers (+91 9380108010) to mark your payouts. We are available from 8 am to answer your calls & queries. You can also raise a ticket to mark your payout. Remember to mark a same day payout the above has to be done within 8.30 am the same day of payout. To avoid & to beat the crowd you also have been provided with a Back Office console & your trading applications are pre – enabled with the specific feature to mark a payout.

Note : Clients with 2 KYC linked bank accounts may note that the payout will be processed only to the Primary bank account of the client.

Margin’s & Exposure

Type of Margins: Cash Component & Non-Cash Component

Cash Components – Cash Credit of client / Fixed Deposits
Non – Cash Component – Pledged Securities ( After HC) / Mutual Funds (After HC) / Others as prescribed by the exchange time to time.

The Margin is a main & underlying stake provided by the client to facilitate his trade in the form of Cash / Stocks to mitigate the market risk involved. The Stock exchanges in our country follow a unique & separate margin requirement mechanism for each segments separately. The requirements of each segments are bifurcated separately below. The new pledge/re-pledge mechanism which was introduced by the regulator was implemented by August, 2020 changed the way in client margin usage both in Intra-day & Portfolio trading.

It was made mandatory by Zebu as required by the regulator to pledge the securities with the broker and avail margins via the same. The prescribed list of Approved Securities by the exchange was used as reference to pick selected stocks for this process based on its VAR (Haircut ) components of the stock.

Pledge & Re – Pledge mechanism

The latest regulations by the regulator has made mandatory for members to intimate their clients about PLEDGE & RE-PLEDGE mechanism.The stipulated way a client can get their capital requirement via collateral pledging. While pledging shares, promoters retain their ownership. However, as the share price keeps fluctuating, the value of the collateral also changes.

Pledged values are computed on daily basis by ascertaining the respective risk values from the exchange directly.
Mutual Funds / ET-F’s / Stocks & Debt Instruments approved for pledge are only allowed to pledge with the member for capital loaning. A vigil way of surveillance has to be maintained as the value of pledged securities may erode at any point of time due to on-going market conditions.

Equities (NSE & BSE )

The following products are currently available for trade in this segment CO / BO / MIS / CNC. The discretion of enabling & disabling the above products based on market risk perspective entirely lies with Zebu RMS. The exposure regulation in this segment will change time to time as prescribed by the regulator & Zebu reserves the right to change it anywhere in the calender trade date accordingly with market risk perspective. Pledged securities with the broker can be used for Intra-day margin’s in products like CO / BO / MIS. Pledged securities margin with the broker can’t be used for CNC product in Equity segment. CNC works only on 100 % margin requirement.

Note – The new peak margin regulations are applicable as prescribed by the regulator in a phased manner. Only 80% of the sale proceeds can be used for same day margining in any segments. The Intra-day exposure in equity segment goes up-to a maximum side as per the daily changing VAR + ELM perspective of the stock. The Higher VAR of the stock lower the exposure of the stock you trade. Detailed calculation link has been provided below.

https://www1.nseindia.com/live_market/dynaContent/live_watch/margincalc/CMInputMargincalc.jsp

Derivatives ( Equity / Currency & Commodity Derivatives ) (NSE & BSE)

i) Futures
The Derivatives segment work in a way with SPAN & LTP proceedings from the previous day. SPAN (Standard Portfolio Analysis of Risk) used by NSE Clearing is a portfolio based margining process. Span + Exposure = Initial Margin (Total Margin). The Trading Member (Zebu) is required to collect the Upfront Initial Margin from the client. This Initial Margins are based on 95 – 99 % Value at Risk perspective.

The SPAN Initially provided over BOD ( Beginning of the Day ) has a multiple personality to change itself up-to 4 times a day, based on the movement of the market. The exposure regulation in this segment will change time to time as prescribed by the regulator & Zebu reserves the right to change it anywhere in the calender trade date accordingly with market risk perspective. Pledged securities with the broker can be used for both Intra-day & Portfolio trading & products like CO / BO / MIS & NRML.

Note – The new peak margin regulations are applicable as prescribed by the regulator in a phased manner. The Intra-day exposure in equity derivatives segment goes up-to a maximum of 1.33 times or 75% of (SPAN + Exposure).

ii) Options (Index Options / Stock Options / Currency / Commodity )
The Option trading in derivative segment uses the same mechanism as futures but with some few component changes . One has to pay the Option premium as the initial margin in-case of Options long position & SPAN + EXPOSURE if its a short position. The exposure regulation in this segment will change time to time as prescribed by the regulator & Zebu reserves the right to change it anywhere in the calender trade date accordingly with market risk perspective. Pledged securities with the broker can be used for Intra-day & Portfolio margin’s in products like MIS & NRML.

Note – The new peak margin regulations are applicable as prescribed by the regulator in a phased manner. The Intra-day exposure in equity derivatives segment goes up-to a maximum of 1.33 times or 75% of (SPAN + Exposure). It has to be noted that no CO & BO orders are available to trade in Options segment. Intra-day or MIS is available only for IDXOPT (Index Options) and not for STKOPT (Stock Options ) CUROPT (Currency Options) / OPTFUT / OPTCOM ( Commodity Options).

Surveillance & Mark-to-Market Square-OFF

The Surveillance policy in Zebu is fully automated with latest robust technology. All the deposits and holds of the client are uploaded in RMS servers & based on margin availability on client accounts positions can be taken & Warned if any shortfall have been observed. As per new peak regulations which are levied from 1st Dec,2020 on regular intervals snaps from Surveillance windows with relevant data are taken.

The integrated & Automated RMS SQR-OFF system will liquidate or cover clients positions in Market price if the live client position reaches 75 % MTM of the total value held.

Note – Liquidation of positions at 75% MTM level can’t be assured all the time and entirely depends upon price movement in exchange.

Periodic validation of all the held positions will be made, Zebu reserves the right to cover or liquidate any risky or exchange delivery positions at any point of time.

All the limits provided via PLEDGE & RE PLEDGE mechanism is liable for daily analysis, the value might change as per daily exchange haircut perspectives.

No terminal mapping & profile modifications will be made from RMS end, for the same one has to request KYC from the registered mail – id or phone number only.

In-case of any shortfall in carry – forwarded (NRML) positions in any segments, the same will be intimated to concern Branches / Branch Managers / Relationship Managers who are liable for client business communications.

Note – Zebu reserves the right to cover & liquidate any heavy shortfall positions > = 150% in a single day if no responses from concerned parties are received.

All the shortfall driven NRML positions under surveillance (i.e) < = 101 – 135 % will be given a Max TAT time up-to T+3 days only. Fail in which no fund add-ons are received positions might be covered.
BF & CF shortfall positions liquidation will start by 3pm in equity derivatives & 10 pm in-case of commodity derivatives.

Business partners are liable for any business related communication with clients at all points, relevant time to time intimations via terminal flashing will also be made. Failing in non availability (Absence – Has to be reported to Regional managers) of RM / Branch people RMS will communicate with clients.

Note – Its required for terminals to be in LIVE mode for admin flashed messages to reach clients.

Circular trading is strictly prohibited & a penalize – able offence according to Exchange – Broker Risk framework.

Derivatives Expiry & Compulsory Delivery

It must be acknowledged and accepted that there can be no guarantee of profits or no exception from losses while executing orders for purchase and/or sale of a derivative contract being traded on Stock exchanges. Zebu provides full freedom to clients to enjoy the complete calender spread in options segment, provided in which the risk liability of the particular positions is entirely vested with the client only. RMS reserves the right to liquidate any risky positions time to time. The SPAN which is periodically broad casted in regular intervals will change time to time & not fixed. In the newly adhered peak regulations by SEBI regular PEAK snaps are taken, its the entire liability of the client to hold sufficient limits in their accounts else penalty will be applicable in below specified variables.

(< Rs 1 lakh) And (< 10% of applicable margin) 0.5%
(= Rs 1 lakh) Or (= 10% of applicable margin) 1.0%

The percentile might go up – to a maximum of 5% as the shortfall days exceed or basis of number of attempt’s in ledger.

Compulsory Delivery

From July 2018 expiry, F&O positions are being settled moved from cash settlement mode to compulsory physical delivery settlement in a phased manner. Starting from October 2019 expiry, all stock F&O contracts will be compulsorily physically settled. If you hold a position in any Stock F&O contract, at expiry, you will be required to give/take delivery of stocks.

It’s here – by requested to client’s and business partners that the part of Equity Derivatives (Future Stock & Option Stock ) has a procedure of compulsory delivery in the form of stocks in respective Demat accounts of client’s according to the Board Lot Quantity of the stock. The exchange obligations varies according to the positions held by the client.

The client’s cash balance has to meet the delivery margin obligations for the positions held on the delivery week. Positions running on margin shortfall will be covered anytime within the delivery week when shortfall arises.

Positions in the delivery contracts has to be covered within 3pm, the last date of expiry day.

Exclusion from contract closure will be allowed only if prior intimation has been provided.

One has to also remember liquidation in these contracts might not be available all the time in all days of the week.

Business partners are liable for any business related communication with clients at all points, relevant time to time intimations via terminal flashing will also be made. Failing in non availability (Absence – Has to be reported to Regional managers) of RM / Branch people RMS will communicate with clients.

Note – Its required for terminals to be in LIVE mode for admin flashed messages to reach clients.

Exchange will impose delivery margin up-to a maximum of 50 – 75 % step by step when the delivery week starts for the said positions. It stats with 5% for the first day and exceeds in further days.

Additional taxes / Charges & delivery penalty is applicable.

Zebu reserves the right to liquidate uncovered positions within 3pm of the expiry day without intimation.

MCX / Commodity Tender & Physical Delivery

It must be acknowledged and accepted that there can be no guarantee of profits or no exception from losses while executing orders for purchase and/or sale of a derivative contract being traded on Stock exchanges.

    • Commodity derivatives positions traded in MCX like viz GOLD / GOLDM / GOLDPETAL / GOLD GUINEA / SILVER / SILVERM / SILVER MIC / BASE Metals a are physically deliverable after the obligation of entire contract value is received from the client.

Delivery via the regional warehouses present across the country.

Its hereby intimated that also certain commodity options positions are also deliverable, ITM / ATM option positions might devolve into futures & then compulsory delivery is implied.

The above said contracts will be blocked immediately as the tender period starts. The tender date falls in 5 days before expiry.

Fresh positions will be blocked in the 1st day of the tender.

Roll over time will be provided for the aforesaid contracts & positions till 10pm in the first day of the tender.

Zebu doesn’t allow to take delivery of certain metal positions.

One has to also remember liquidation in these contracts might not be available all the time in all days of the week.

Business partners are liable for any business related communication with clients at all points, relevant time to time intimations via terminal flashing will also be made.

Failing in non availability (Absence – Has to be reported to Regional managers) of RM / Branch people RMS will communicate with clients.

Note – Its required for terminals to be in LIVE mode for admin flashed messages to reach clients.

Additional taxes / Charges & delivery penalty is applicable.

Zebu reserves the right to liquidate uncovered positions within 10pm of the expiry day without intimation.

Equity Settlement Obligations

Equity stocks traded in India follow a fixed & pre – calendered settlement mechanism across the year. The settlement cycle varies accordingly with the category or the stock type here, Eg : SGB (Sovereign Gold Bonds) which gets settled in T3. T+2 settlement is followed in Indian stock markets . Starting with Buying & Selling of the stock it takes 2 days for the stocks to get settle in-case of buying & cash settlement in case of selling also.

    • However 80 % of the sale proceeds can be used for same day margining.

Early pay – in is a mandate from exchange end for settlement obligations to get completed.

BTST – In Buy today Sell tomorrow concept of trade you are allowed to sell your T1 holdings well before it gets settled in your demat account.

Note – The risk liability of BTST transaction entirely lies with client only, as stock settlement is always based on availability in exchange only.

Before clients making a SHORT – SELLING in BO / CO / MIS products should ensure the availability of units in client demat account.

Note – Specific symbols might hit Upper freeze time to time in which selling will lead to penalty & auctioning.

Equity Corporate actions

Corporate actions are one of the major factor that determines the health of the stock we hold. Sometime corporate actions provide the stock holder a lump sum good deal, some might also affect the share price too. Hence as a shareholder the client has the liability to keep watching out AGM’s & Corporate actions. In this scenario the client will be directly intimated via mails regarding the upcoming corporate actions and important dates.
Corporate actions include Stock Split / Rights Issues / Dividends / Mergers & Acquisitions / Spin off / Buyback / Bonus