Risk Policy

MARKET RISK MANAGEMENT POLICY

1. Introduction: Investment in securities is susceptible to market risks. While the risk of loss is inherent in the market, we at Groww, seek to minimize the risk of loss through a dynamic risk management policy which is an essential feature of our product offering. As our customer, it is important for you to be aware of our Risk Management Policy and how the Policy would operate to regulate your transactions. It is also important to note that the Risk Management Policy is not an insurance against losses; these are measures and precautions that are adopted to contain risks to the minimum. The Policy is subject to change according to our risk perceptions of the market and relevant regulations for the time being in force.

2. Clearance of Debit balance:

1. 1. Clients who have opted for monthly or quarterly settlement should also ensure they abide by the same failing which we will settle their account by selling the holdings in case of continuous debit balance.
   2. The debit to be considered for selling may be for trading (MTM losses and obligations) and NON trading debits (DP Dues, other charges etc)
   3. SEBI guidelines (November 2022 onwards) with regards to the unpaid securities state that the securities that have not been paid for in full by the clients; should be transferred to respective client’s demat account followed by creation of an auto-pledge (without any specific instruction from the client) with the reason ”unpaid” in favor of a separate account titled ”client unpaid securities pledgee account”, which would be opened by TM/CM. Accordingly, we may at our discretion on a case-to-case basis create the pledge for unpaid securities for any debit balance with approximately 150% of the debit value (or as per regulatory guidelines) to take care of any movement in market prices of securities. Such securities may be liquidated to clear any debit before release of pledge.
      
      (i) In case there are multiple securities; “First in First Out” (FIFO) logic will be followed wherever . However, in case the stock basis FIFO logic could not be sold due to less liquidity or due to security in lower circuits or any other reason, then we may sell any other security to clear the outstanding debits.
      

3. Imposition of penalty/delayed payment charges: 

1. The Clients are required to settle the pay-in/ provide margin within the time limits provided by Exchanges/ SEBI or earlier as per our internal policy if any for a particular product. 
2. Any amounts which are overdue from the clients towards trading or on account of any other reason to us will be charged with delayed payment charges at the rate up to 24% per annum notified by us from time to time. Such Interest on delayed payment shall be directly debited to the account of the Client at the end of every month\Week\Daily basis.
3. We may impose fines / penalties for any orders / trades / deals / actions of clients which are contrary to this agreement / Rights & Obligations rules / regulations / bye laws of the exchange any other law for the time being in force, at such rates and in such form as it may deem fit.
4. Further where we must pay any fine or bear any punishment from any authority in connection with / as a consequence of / in relation to any of the orders / trades / deals / actions of the client, the same shall be borne by the client.
5. Further we may restrict the client to trade or take further positions.

4. Scrip categorisation for leverage and collateral benefit: 

1. For risk management, we categorize scrips listed on NSE and BSE into different categories based on different parameters.
2. These parameters are decided by us considering our internal policies.
3. The list of securities against which collateral (in form of pledge) can be taken along with the haircut percentage is displayed on the website and updated from time to time. Further, for leveraged positions (intraday or carry forward), the list of securities along with the leverage / haircut % will also be displayed on the website and updated from time to time.
4. The leverage shall be revised at any time (including non-offering of leverage all together) based on the market conditions and the decision shall be at the sole discretion of the company.

5. Scrips blocked for trading: We shall not be responsible for non-execution/delay in execution of orders in restricted scrips and contracts and consequential opportunity loss or financial loss to the customer. We shall have the discretion to place such restrictions, notwithstanding the fact that the customer has adequate credit balance or margin available in his account and/or the customer had previously purchased or sold such securities / contracts on our platform earlier. We shall have the right to revise the list of such securities / contracts on a periodic basis.

Summary of scrips blocked for trading:

**  In the event if the Client/Investor wish to sell the “SMS stocks”, kindly reach out to the customer support desk at [email protected]

Any securities as per regulatory mandate / communication or at the discretion of the company might be blocked on case-to-case basis

6. Intraday and leverage products: (restricting exposure and square-off and important points)

1. Time based Intraday Square off – Daily – Starting from 10 minutes before close of normal trading session.
2. This includes all types of Intraday products i.e., Cover Order, Bracket Order and Stop Loss Orders
3. Every day system will stop allowing any further intraday order anytime after 3.20 PM. System first removes all pending orders and then squares off all Intraday orders.  At the time of Intraday order square off trigger, all pending orders would be canceled, and orders will be sent to exchange for square off. The orders sent to the exchange will be executed on the best effort basis.
4. This is irrespective of target reached / profit and loss position.
5. In case of any price movement > 80% of circuit limit, further exposure in intraday products will be blocked by the system for that security.
6. In case of price movement > 80% of circuit limit, open positions will be squared off in case of adverse MTM for that security. For stocks included in F&O segment the initial dummy circuit will be 30% till 3.05 PM and after that it will be as per the exchange defined temporary circuit (currently 10%). E.g., 1) in case of circuit limit being 20%, for any 16% up movement, all short positions will be squared off 2) For F&O stock the  circuit filter being 30% before 3.05 PM the square off will happen at 24% move (80% of 30%) and after 3.05 PM the square off will happen at 8% move (80% of 10%)
   

     i). In case the positions cannot be squared off due to lack of liquidity, the trade will result in delivery trade and will be settled accordingly. 

            ii).In case of Non squared off short positions, 30% (or above) extra margin will be blocked till auction settlement is completed. 

           iii).In case of Non squared off long positions, client needs to pay the balance amount to the extent of entire obligation on T Day only. We will initiate a square off of non-paid up obligations on T+1 day from the start of market hours. 

7. This is in addition to the MTM based square off across product and exchange segments.
8. As a client, you should be aware of the Intraday Product has risks associated with higher leverage in the Intraday Trading Facility as compared to trades in the regular market positions and, therefore, while the opportunity for making profits on the investment is magnified, the risk of loss would also be enlarged correspondingly.
9. Client agrees and accepts that enlisting him/her for the Intraday Trading Facility shall not oblige him/ her to place Intraday Orders requested in any scrips even though margin required for placing a trade order under the Facility is available in the account.
10. Client also understands and agrees that the option to convert Intraday trade positions to carry forward positions is subject to full margin being made available upfront unless such margin is already lying to the credit of the account.
11. Client agrees and accepts that if for any reason beyond our control, like force majeure causes, disruptions in the communication network, system failure, slow or delayed response from system, trading halts, or the Exchange applying circuit filters because of which the open Intraday positions could not be squared off and are carried forward, client is expected to Square them off on a best effort basis, as soon as may be, and any and all losses arising from such events will be to client’s account.
12. Client also agrees and accepts that he/she will not hold the broker, their directors, officers, or employees liable for any loss that they may sustain because of availing of this facility. 
13. Maximum permissible exposure limit to a client for a day may be capped irrespective of Ledger and collateral.

7. Real time Risk based forced Square-off:  

1. We may initiate square off for a particular client without prior intimation due to market volatility, intimation by regulators or as prescribed in any other rules or regulation.
2. We shall have no obligation of communicating the same to the Client although as a measure of good governance all possible steps will be undertaken subject to market volatility and time for timely communication.
3. We shall not be responsible for any losses incurred by the Client due to such squaring off the open position of the Client.
4. Positions created would be subject to either client himself squaring off OR Risk based square off (MTM Loss for all products across segments @ 80% of Total Deposit — Ledger / funds + Holding after Haircut) OR Time Based Square off for intraday products.
5. At MTM loss the position will be reduced on the best effort basis and customers will be liable for such losses.

8. Trading limits and caps: We may levy certain limits (either mandated by regulator or as per our internal policies) on trading on our platform. These are to ensure no fat finger error is multiplied and results in systemic risk for either the client or us. Below are the most common limits and caps we have on our platform. We shall not assume any liability in respect of orders rejected by reason of their quantity or value exceeding the cap value. 

1. Single order quantity and value cap
2. Turnover limit at client and scrip level
3. Product level cap at scrip level
4. Concentration capping for collateral limit at client level and scrip level
5. Basket orders will not be allowed.
6. AMO will be canceled if the price entered is more than 3% away from the LTP in either direction

9. Shortages: As per the prevailing guidelines, clients are required to make securities pay-in on or before settlement day as per our policy. However, we are not obliged to deliver any securities to the client unless and until the same has been received by us from the clearing corporation/ clearing house or other entity liable to deliver their securities. In case of default in security pay-in by the client, we as per the internal settlement guidelines, shall debit an amount known as valuation debit to the clients. In case of default in security pay-in by the client there is a possibility of internal shortages at our end. These internal shortages are marked against clients randomly at the sole discretion of the broker. In case of internal shortage, the obligation will be closed out at the highest traded price in Exchange from the day of trading till the auction day or at a percentage as applicable from time to time above the official closing price on the auction day, whichever is higher, as a penalty on the defaulting client and the benefit will be passed on to the respective beneficiary client. The close-out rate excludes any penalty levied due to short selling of securities/ Non-delivery of shares. Scrip which is settled on a Trade-to-Trade basis at Exchange does not fall under the above-mentioned policy.

10. Futures and Options (Equity Derivatives):  

a. Contracts available for trading: 

I. Derivatives trading is offered in the Equity-Derivatives segment offered on NSE only. 

II. Index Futures and Options – Only in Underlying NIFTY, BankNifty, MidcapNifty and FinNifty will be allowed

• Contracts outside the range of +/- 20%  range of underlying price will be blocked for trading.  Square-off for existing positions will however be allowed. 
• Any contracts within the +/- 20% range might be additionally blocked based on the open interest and liquidity as per the discretion of Groww. Square-off for existing positions will however be allowed. 

• Contacts will be allowed for an expiry period of 3 months (current and next 2 only. Contacts for later months may be opened nearing the current month expiry at the discretion of Groww. 

III. Stock Futures and Options:

• Contracts outside the range of +/- 20 % range of underlying price will be blocked for trading.  Square-off for existing positions will however be allowed. 

• Any contracts within the +/- 20% range might be additionally blocked based on the open interest and liquidity as per the discretion of Groww. Square-off for existing positions will however be allowed. 

• Contacts will be allowed for an expiry period of 2 months (current and next) only. Contacts for later months may be opened nearing the current month expiry at the discretion of Groww. 

b. Market Orders: 

1. In case of option orders, the market orders will be placed as a limit order after applying a certain market protection percentage (in the range of 5 to 25% depending on liquidity and price). In case of non-availability of prices, market order may not be allowed altogether, and the client needs to place a limit order. For other instruments in F&O segment (futures / option selling) Allowing / disallowing market orders will be at the sole discretion of Groww.
2. Due to exchange imposed member level open interest restrictions, not all strike prices for option contracts may be available for trading in case the Open Interest (OI) level is hit.
3. On the last day of monthly expiry for stock derivatives positions (Stock options and Stock Futures) – a) Only square off orders will be allowed for open positions till 10 AM on expiry day b) After 10 AM onwards for the rest of the trading day – trading will be blocked and open positions (if any) will be squared off by us as per the Physical Settlement policy.

c. Margin and Margin Collection:

I. Margin is the minimum amount which is required to take a position in the equity derivatives segment as prescribed by stock exchanges from time to time. 

II. This includes all the exchange mandated margins (E.g Span, Exposure, Delivery, Additional etc) and any additional margins as levied by Groww at its discretion

• For buying options: The premium amount + Any other delivery margin as charged before physical settlement 

• For Shorting options and for Futures: Span + Exposure + Delivery margin charged during physical settlement + Any other additional margin as levied by the exchange / Groww.  

• Hedge benefit (if any) may be provided on Span margin only as per the relevant positions of the client and as per the hedge benefit calculation available from exchange mandated Span.  

• Groww at its sole discretion may levy additional margin which is over and above the margins already levied by the Exchange from time to time. 

III. Clients need to give upfront margins which are defined by stock exchanges before taking positions in the derivatives segment. Groww reserves the right to charge higher margin than the margin stipulated by the stock exchanges based on our internal Risk Management policy from time to time. 

IV. Clients are advised to monitor their positions on a real time basis and never keep any shortfall. 

V. The clearance of shortfall based on the timelines if any given by Groww for liquidation in case of shortfall being continued should be strictly followed. 

VI. The payments are accepted only in the  electronic forms and may include NEFT/RTGS/UPI or any other mode of transfer which is made available by Groww. 

VII. Any Shortfall in margin may result in penalties from the exchange which may be transferred (for the type of shortfall penalties transferrable to the client as per regulations in force) to the client’s ledger.  

d. Shortfalls and Risk based force square off:

I. Markets are volatile and price movements can be very erratic especially in the F & O segment. Events can be pertaining to a particular stock or stock market as a whole. This may result in shortfalls and also liquidation in case the shortfall is not met. Square off orders for margin shortfall in F&O will be placed in maximum lots of 20. In case of open position to be squared off is more than 20 lots, orders will be split to avoid high impact cost and exchange surveillance.

II. Shortfall can arise due to increase in margin required (e.g. increase in margins due to volatility or additional margin levelied for physical settlement etc) OR fall in margin available (e.g. payout of funds, Mark To Market (MTM) losses etc) OR Both. 

III. Shortfall = Margin Available – Margin Required (REWRITE)

• Margin Available = Adjusted Ledger Balance  after considering successful pay-in and pay-out (complete or initiated) of funds +  post haircut value of pledged securities (if any) – Unrealised and Realized losses for all exchange segments (note that profits — realized and/or unrealized will be ignored till it is posted in the ledger  where it will then be considered in the form of ledger balance) + Net stocks sold from demat (-considered for Early payin / lying in Pool A/c) – applicable brokerage & charges 

• Margin Required = Margin blocked for any trades in Equity segment + Span margin + Exposure margin + Delivery margin (for physical settlement if any) + any other exchange mandated /  additional margin imposed by Groww 

• (Margin available) / (Margin Required) = Margin Available % 

IV. Clients position may be squared off if any of the following ‘Time based’ square off: 

• Client will be duly intimated about the  shortfall amount after clearance as the clearance of shortfall is immediately on any amount of shortfall on real time basis post the peak margining norms. 

• Positions will be squared off to the extent of covering the entire shortfall. In case of extreme MTM loss due to movement of prices, the positions will be reduced on a best effort basis and customers will be liable for such losses.

V. In case of increase of margin by the exchange post trading hours, the customer should fund the account before the end of day on the same day else there might be a penalty for short collection of margin which will be passed on to the client (as permitted by the regulations in force). 

VI. All losses from daily settlements and losses from square off which are not paid shall be recovered by selling available shares of the Client and Client shall be liable to pay the remaining balance forthwith. 

VII. In case the net premium for open positions of options is eroding the margin available of the client by more than 80% (margin available post the net buy premium remains at 20%), the positions for short options will be squared off.  

e. Intimation of Shortfall: 

I. Groww may initiate communication through email / sms or any other mode of communication for intimation if shortfall along with the stipulated time for reducing the shortfall either through infusion of funds / squaring off of positions 

II. In case the timeline is not followed, Groww reserves the right to liquidate the positions to cover the entire shortfall. 

III. Note that the intimation of shortfall is at the discretion of Groww and we shall have no obligation of communicating the same to the Client although as a measure of good governance all possible steps will be undertaken subject to market volatility and time for timely communication. Clients should monitor the position at all times. 

IV. We may initiate square off for a particular client without prior intimation due to market volatility, any shortfall where there is penalty by exchange,  intimation by regulators or as prescribed in any other rules or regulation.

V. In any case, if the available margin falls below the threshold for forced square off, the positions may be liquidated by Groww without further notice. 

VI. We shall not be responsible for any losses incurred by the Client due to such squaring off the open position of the Client.

f. Ban period: No fresh positions OR Roll over of existing positions will be allowed if the security is in ban period. Clients can square off their existing positions.  

g. Limits and Caps: There will be certain restrictions on placing transactions and for total turnover as per the internal policy of Groww as updated from time to time. Some of the most relevant caps are highlighted below.  

I. Single order limit (in Quantity and value in Rs)  

II. Exposure and Turnover cap at client level 

III. Exposure and Turnover cap at underlying level

IV. Client wise position limits 

• Stock Underlying: As per exchange prescribed limits
• Index Underlying: 
  1. Nifty: 2 lakh Qty
  2. BankNifty: 80 Thousand Qty
  3. FInNifty: 1.5 Lakh Qty
  4. MidcapNifty: 4 lakh Qty

h. Other points:

I. Premium received from option selling will be allowed to buy options and not for any other purpose including taking positions in futures. This is to ensure the margin reporting framework and avoid short margin collection penalties. 

II. Any Mark to Market profit on T day (Realized or Unrealised) will not be considered for exposure and also for monitoring purposes. This is to ensure that the benefit of profit is given only on settlement. However losses will be reduced from available margin (both – realized and unrealised. 

i. Physical Settlement: 

I. All open position(s) in the F&O segment (except those who have opted for physical settlement) should be squared off before 10:00 AM on expiry day (Monthly expiry). 

II. We will square off all open positions from 10 AM onwards on expiry day for all open positions (in stock derivatives) for that expiry irrespective of margin availability in case the client has not opted for physical delivery successfully. 

III. For all clients who want to avail the option for physical settlement, express request needs to be given by 4 PM on T-1 working day (T day being expiry). 

• • • • Further, the client needs to have the entire margin for the notional contract value by 4 PM on T-1 working day (T day being expiry).
      • This is in addition to the Span and Exposure Margin and the exchange mandated Delivery margin for ITM Long options 
      • No hedge / spread benefit will be given on this and notional value will be gross notional value for all legs. 
      • Limit Available = "Cash Margin Avail" + "Notional Cash" + "Pay In Amount" - "Payout Amount" - MF / IPO / SGB / Bonds etc purchase - CNC Buy + CNC Sell - Net option premium paid  - Net Realized MTM Prsnt  - "Brokerage Present" - "CNC Brokerage Present" + Realized profit + Unrealised MTM 
      • **Notional Value = 
        1. For Futures → Lot size*No of Lots*(101% of LTP) 
        2. For Options → Lot size*No of lots*{Strike+ (Premium amount at LTP x 101 %)}
      • If (Limit Available >= Notional Value) then user ‘Physical Settlement’ is SUCCESS else it will marked as FAILED  

IV. For all clients who have not submitted consent and who do not square-off their positions before 10 AM on expiry day: 

• • • • • Positions will be squared off by us at prevailing market rates. Such square-off orders will be placed by our team as “Market Orders” and / or Limit price protected orders as per regulations in force and we shall not be liable for the rate at which they are executed.
        • If we cannot square off your positions due to any reason including lack of liquidity, positions will be physically settled by the Exchange, and you will have to bear the costs (penalties & losses) arising from it. 
        • For a long open position (Long Futures, Long Call Options, Short Put Options) : This will result in Buy Equity Delivery obligation; and you will be liable to pay the entire settlement amount as per Equity segment settlement.  
        • For a short open position (Short Futures, Short Call Options, Long Put Options) : Your short position will get converted into; Sell Equity Delivery Position, and you will be liable to deliver the shares. In case of short delivery, an auction obligation will arise and all the costs / charges / losses will have to be borne by you.

V. Policy regarding Close to Money contracts (CTM) and Do Not Exercise (DNE) facility: NSE has discontinued the DNE facility from March 2023.

VI. We encourage squaring off all open F&O trades which might result in physical delivery to avoid these hassles. 

1. In case of any hedge (e.g. calendar hedge) where one leg of the position is expiring on (trading day) T-day and any / all other legs are expiring on later days, there exists a possibility of margin shortfall at end of the day when the benefit of the leg expiring on T-day is not available.
2. In such cases there might be a shortfall and resultant penalty from the regulators / exchanges for upfront margin / peak margin.
3. To avoid any shortfall or levy of penalty, clients should ensure that sufficient margin is available excluding the hedge benefit (assuming that the hedge benefit for the leg(s) expiring today is no longer available)  30 minutes before market close on any given T-day.
4. Any failure to maintain adequate margin may result in squaring off those leg(s) of positions expiring at a date later than T-day to regularize the projected shortfall based on simulation of positions excluding the positions expiring on T-day.
5. We reserve the right (but not an obligation) to square off your open positions where your positions are hedged and our Risk management system foresees a margin shortfall in your account (based on simulation) when one leg expires.
6. Kindly note that we shall not be liable for any loss, damages etc caused to you as a result of such square off.

11. Pledge: 

1. Collateral margins will be made available from T+1 day i.e. next trading day.
2. The list of securities accepted as Collateral along with applicable haircut will be displayed at the time of accepting pledge. The amount of haircut will be applicable as per the internal risk policy (which will be as per the exchange defined margins or stricter) and the rate of haircut may change from time to time at the sole and absolute discretion of Groww Invest Tech Private Limited including but not limited to removal of securities from approved list. E.g. A haircut of 10% would mean that if you pledged stocks worth Rs 1 lakh, Rs 90,000 (90% of 1 lakh) will be added as collateral margin. 
3. Collateral value will be calculated in real time and the worst case is considered for valuation. (Worst case means lowest of LTP or previous day’s closing price).  
4. For the purpose of margin Reports and exchange margin reporting, standard margins (VaR + ELM or any other rate of margin as defined in regulatory guidelines from time to time) will be applicable as the haircut. Thus, Collateral valuations in the margin report will be as per regulatory margins whereas on the trading platform for the purpose of collateral limit, it will be as per internal haircut policy which may be more stricter/higher than regulatory applicable margins. 
5. Further exposure will be blocked from T+5 trading days in case of ‘ageing’ debit.'Ageing' debit may be liquidated beyond T+5 as per the due date defined internally (currently this will be liquidated if the ageing is beyond T+60 days) which may be changed and duly communicated whenever changes made are applicable. 
6. In case of MTM loss / steep fall in value of pledge collateral affecting coverage, the pledge collateral and the open positions will be squared off without any further notice and the client shall be solely responsible for all the costs and consequences arising therefrom. The threshold of square off may be defined and changed as per internal policies which may be changed and duly communicated whenever changes made are applicable. 
7. Collateral Margins will not be available for exposure in “Delivery product” in the Equity segment. Further allowing collateral margin for option buying may or may not be allowed as defined and changed as per internal policies which may be changed and duly communicated whenever changes made are applicable. 
8. Margin calls / liquidation communications will include the collateral value post haircut / at LTP depending on the liquidation parameters. 

   i. For regulatory shortfall reporting - the valuation will be post haircut as per the rate (LTP or previous close) mentioned in regulatory guidelines. 

   ii. For MTM loss on open position And / Or Steep fall in collateral valuation to the extent of more than 70% (or any other threshold as per internal policies which may be changed and duly communicated whenever changes made are applicable) , the calculation will be based on LTP and positions will be liquidated without any further notice to the client and the client shall be solely responsible for all the costs and consequences arising therefrom. 

9. In case of corporate action / removal from the approved list, collateral may be removed from the approved list to mitigate the price risk. In such a case if any other collateral / funds are not provided as replacement for coverage / margins, the collateral will be liquidated to prevent shortfall / debit and the client shall be solely responsible for all the costs and consequences arising therefrom.
10. NBT reserves the right to make any changes in the policy with due intimation to the client and the client will be bound by the same .

The Company reserves the right to amend/modify any of the policies/procedures mentioned above from time to time depending upon regulatory, market, external conditions and our internal risk management framework, and the customers can obtain such change/ modification from the Company’s website / app.

12. MTF Risk policy

Background:

1. MTF product offers features of buying securities with leverage against available margin (funds + collateral pledged) with Groww by the client.  
2. Under this product, buy trades are allowed in product type ‘MTF’ with the leverage percent as defined on a daily basis as per internal risk approved list. 
3. Leverage will not exceed (but can be more stringent) than SEBI defined criteria which is currently VAR + 3x ELM for stocks in derivatives and VAR + 5x ELM for non-derivatives stocks for Group I securities as per SEBI norms. 
4. By nature, this is a leverage product and the client needs to maintain adequate margin at all point in time against his / her outstanding obligation. 
5. MTF positions can be held indefinitely subject to margin norms. However Groww Invest Tech Private Limited will have the right to change their policy of liquidating any positions after giving due notice.

Leverage and margins:

1. List of eligible stocks will be within the Group 1 securities as defined by Exchanges / regulators and minimum margin requirement would be at the same or higher threshold than the requirement as defined by regulators / exchanges .
2. Maximum leverage will be 4 times on base margin. E.g. If a client has ₹ 1,00,000 margin he / she can avail an exposure of ₹ 4,00,000.
3. Margin can be in the form of cash and / or non-cash collateral (stocks which can be considered as collateral will be as per internal risk policy) with applicable haircut.
4. Quantum of leverage may  change on a daily basis and Groww Invest Tech Private Limited will have the sole discretion to decide the same.  

Maximum and Concentration Limits

1. Member level limit: 80% of networth linked limit as derived by SEBI MTF circular. 
2. Client Limit: Maximum of 50 Lakhs or 10% of member level limit  
3. Stock Limit: Defined from time to time as per internal policy.
4. Client - Stock concentration: Defined from time to time as per internal policy.

Risk Liquidations

1. Mark to market (combined at client level across positions): In case 80% of available margin is eroded across products (including MTF) at a client level. This will result in instant square off of all open positions (including MTF but except normal delivery positions in the equity segment) without any further notice / margin call. 

2. MTF shortfall: This is similar to Loan to Value (LTV) Or Collateral to Loan (CTL) monitoring for Lending products. 

1. 1. The MTF ledger balance of the client (negative amounts only) will be considered as the “Loan Amount” (A). Any balance in normal ledger (+ve or-ve will be ignored)
   2. Available securities pledged for coverage will be valued at post haircut value where the haircut is the latest haircut as per the approved list for MTF. This can be termed as “Collateral Value for Coverage”. At a stock level this value will be {(LTPxQty)x(1-HC%)}. Value will be summed up across all pledged stocks under MTF (B)
   3. C = ( B / A ) x 100. If C <=85, then margin call will be triggered and the client needs to top up margin either by selling stocks or payment of funds within T+x days (by the EOD of T+x day where T is the date of margin call and days are calculated in form of trading days) (currently T + 1 day) from the date of margin call. In absence of the same, we will liquidate to the extent of making C >=100%  on T+x +1 day (currently T+4 days) as per regulations in force. 
   4. Note that the criteria of approved stock for “B” above  will be as per the date of margin call. 

3. Ageing Liquidation: Not applicable currently.

4. T+1 liquidation for non confirmation of pledge:

1. 1. T is the date of initiating the position in MTF - calculation in terms of trading days
   2. In case the client has not approved MTF pledge till the time provided on T day as per internal product policy, stock will be sold on T+1st day from risk (and settled from CUSA pledge at EOD)
   3. Entire position qty will be sold for which the pledge approval was not given by the client
   4. In case of any auction / closeout impact - client needs to bear the same 
   5. Such position will be sold on T+1 as ‘Delivery sell’ and the qty will not be allowed for clients to sell on T+1st day
   6. Fresh exposure will be blocked in any leverage product (MTF and Intraday) in the same stock where selling is done for this reason to avoid net zero settlement obligation.  

5. Stock moving out of approved list / out of Group 1 securities as per SEBI norms: Point 2 process will apply with same timelines. Since stock has moved out of the approved list, the post HC value will be NIL.