RIGHTS & OBLIGATIONS OF STOCK BROKERS & CLIENTS FOR

MARGIN TRADING FACILITY (MTF)

 

In order to facilitate its customers HDFC Securities is introducing the facility of Margin Trading facility (MTF) under its product category called E-margin. Thus going forward in the said document Margin Trading Facility (MTF) should be read as E-margin.

 

Part A : Rights and Obligations – Mandatory Clauses of BSE

  1. Stock Broker/ Trading Member is eligible to provide Margin Trading Facility (MTF) in accordance with SEBI & Exchange Guidelines as specified from time to time.
  2. Stock Broker/ Trading Member desirous of extending MTF to their clients is required to obtain prior permission of BSE. Stock Broker/ Trading Member may note that BSE has the right to withdraw the permission at anytime.
  3. Stock Broker/ Trading Member shall extend the MTF/ to the client, on such terms and conditions as specified by the Stock Exchange / SEBI from time to time. Stock Broker/ Trading Member and the client shall abide by the requirements of the margin trading framework, including rights and obligations, as prescribed by Stock Exchange/ SEBI/ Stock Broker/ Trading Member.
  4. Stock Broker/ Trading Member shall intimate all the terms and conditions, including maximum allowable exposure, specific stock exposures etc., as well as the rights and obligations to the client desirous of availing MTF.
  5. Stock Broker/ Trading Member may, at its sole and absolute discretion, increase the limit of initial and/or maintenance margin, from time to time. The Client shall abide by such revision, and where there is an upward revision of such margin amount, he agrees to make up the shortfall within such time as the Stock Broker/ Trading Member may permit. It may however, be noted that the initial/ maintenance margins shall never be lower than that prescribed by Stock Exchange/ SEBI.
  6. 6. Stock Broker/ Trading Member shall provide MTF only in respect of such shares, as may be permitted by Stock Exchange/ SEBI.
  7. Stock Broker/ Trading Member shall liquidate the securities and other collateral, if the client fails to meet the margin call to comply with the margin requirement as specified by Stock Exchange/ SEBI/ Stock Broker/ Trading Member. In this regard, Stock Broker/ Trading Member shall also list down situations/ conditions in which the securities may be liquidated (Stock Broker/ Trading Member to list down situations/ conditions which are included in the subsequent part of the T&C below).
  8. Stock Broker/ Trading Member shall not use the funds of one client to provide MTF/ to another client, even if the same is authorized by the first client.
  9. The stocks deposited as collateral with the Stock Broker/ Trading Member for availing margin trading facility (Collaterals) and the stocks purchased under the margin trading facility (Funded stocks) shall be identifiable separately and no comingling shall be permitted for the purpose of computing funding amount
  10. IPF shall not be available for transactions done on the Stock Exchange, through MTF/, in case of any losses suffered in connection with the MTF availed by the client.

The rights and obligations prescribed hereinabove shall be read in conjunction with the rights and obligations as prescribed under SEBI circular no. CIR/ MIRSD/ 16/2011 dated August 22, 2011

 

Part B : Rights and Obligations – Mandatory Clauses of NSE

CLIENT RIGHTS

  1. Client shall receive all communications in a mode mutually agreed between the broker and the client regarding confirmation of orders/trades, margin calls, decision to liquidate the position / security.
  2. Client shall be free to take the delivery of the securities at any time by repaying the amounts that was paid by the Stock Broker to the Exchange towards securities after paying all dues.
  3. Client has a right to change the securities collateral offered for Margin Trading Facility at any time so long as the securities so offered are approved for margin trading facility.
  4. Client may close / terminate the Margin Trading Account at any time after paying the dues.

 

CLIENT OBLIGATIONS

  1. Client shall, in writing in his own hand or in any irrefutable electronic method, agree to avail of Margin Trading Facility/E-margin in accordance with the terms and conditions of Margin Trading Facility offered by the broker, method of communication for confirmation of orders/trades, margin calls and calls for liquidation of collateral/security/position.
  2. Client shall inform the broker of its intent to shift the identified transaction under Margin Trading Facility within the time lines specified by the broker failing which the transaction will be treated under the normal trading facility
  3. Client shall place the margin amounts as the Stock Broker may specify to the client from time to time.
  4. On receipt of ‘margin call’, the client shall make good such deficiency in the amount of margin placed with the Stock Broker within such time as the Stock Broker may specify.
  5. By agreeing to avail Margin Trading Facility with the broker, client is deemed to have authorized the broker to retain and/or pledge the securities provided as collateral or purchased under the Margin Trading Facility till the amount due in respect of the said transaction including the dues to the broker is paid in full by the client.
  6. Client shall lodge protest or disagreement with any transaction done under the margintrading facilitywithin the timelines as may be agreed between the client and broker.
 

STOCK BROKER RIGHTS

  1. Stock Broker and client may agree between themselves the terms and condition includingcommercial terms if any before commencement of MTF.
  2. Stock broker may set up its own risk management policy that will be applicable to thetransactions done under the Margin Trading Facility. Stock broker may make amendmentsthere to at any time but give effect to such policy after the amendments are dulycommunicated to the clients registered under the Margin Trading Facility.
  3. The broker has a right to retain and/or pledge the securities provided as collateral or thesecurities bought by the client under the Margin Trading Facility.
  4. The broker may liquidate the securities if the client fails to meet the margin call made bythe broker as mutually agreed of liquidation terms but not exceeding 5 working days fromthe day of margin call.

 

STOCK BROKER OBLIGATIONS

  1. Stock broker shall agree with the client the terms and condition before extending MarginTrading Facility to such client. However, for clients who already have existing tradingrelationship and want to avail of Margin Trading Facility, stock broker may take consent inwriting in his own hand or in any irrefutable electronic method after stock broker hascommunicated the terms and conditions of Margin Trading Facility to such existing clients.
  2. The terms and conditions of Margin Trading Facility shall be identified separately, in adistinct section if given as a part of account opening agreement.
  3. The mode of communication of order confirmation, margin calls or liquidation ofposition/security shall be as agreed between the broker and the client and shall be in writingin his own hand or in any irrefutable electronic method. Stock broker shall prescribe andcommunicate its margin policies on haircuts/ VAR margins subject to minimumrequirements specified by SEBI and exchanges from time to time.
  4. The Stock Broker shall monitor and review on a continuous basis the client’s positionswith regard to MTF. It is desirable that appropriate alert mechanism is set up through whichclients are alerted on possible breach of margin requirements.
  5. Any transaction to be considered for exposure to MTF shall be determined as per thepolicy of the broker provided that such determination shall happen not later than T + 1 day.
  6. If the transaction is entered under margin trading account, there will not be any furtherconfirmation that it is margin trading transaction other than contract note.
  7. In case the determination happens after the issuance of contract, the broker shall issueappropriate records to communicate to Client the change in status of transaction fromNormal to Margin trading and should include information like the original contract numberand the margin statement and the changed data.
  8. The Stock Broker shall make a ‘margin call’ requiring the client to place such margin; anysuch call shall clearly indicate the additional/deficient margin to be made good.
  9. Time period for liquidation of position/security shall be in accordance declared policy ofthe broker as applicable to all MTF clients consistently. However, the same should not belater than 5 working (trading) days from the day of ‘margin call’. If securities are liquidated,the contract note issued for such margin call related transactions shall carry an asterisk oridentifier that the transaction has arisen out of margin call.
  10. The daily margin statements sent by broker to the client shall identify themargin/collateral for Margin Tradingseparately.
  11. Margin Trading Accounts where there was no transactions for 90 days shall be settledimmediately.
  12. The stocks deposited as collateral with the stock broker for availing margin tradingfacility (Collaterals) and the stocks purchased under the margin trading facility(Fundedstocks) shall be identifiable separately and there shall not be any comingling for the purposeof computing funding amount;
  13. Stock Broker shall close/terminate the account of the client forthwith upon receipt ofsuch request from the client subject to the condition that the client has paid dues underMargin Trading Facility.

 

TERMINATION OF RELATIONSHIP

  1. The margin trading arrangement between the stock broker and the client shall beterminated; if the Stock Exchange, for any reason, withdraws the margin trading facilityprovided to the Stock Broker or the Stock Broker surrenders the facility or the Stock Brokerceases to be a member of the stock exchange.
  2. The MTF facility may be withdrawn by the broker, in the event of client committing anybreach of any terms or conditions therein or at anytime after due intimation to clientallowing such time to liquidate the MTF position as per the agreed liquidation terms withoutassigning any reason. Similarly, client may opt to terminate the margin trading facility in theevent of broker committing any breach of any terms or conditions therein or for any otherreason.
  3. In the event of termination of this arrangement, the client shall forthwith settle the dues ofthe Stock Broker. The Stock Broker shall be entitled to immediately adjust the MarginAmount against the dues of the client, and the client hereby authorizes the Stock Broker tomake such adjustment.
  4. After such adjustment, if any further amount is due from the client to the Stock Broker,the client shall settle the same forthwith. Upon full settlement of all the dues of the client tothe Stock Broker, the Stock Broker shall release the balance amount to the client.
  5. If the client opts to terminate the margin trading facility, broker shall forthwith return tothe client all the collaterals provided and funded securities retained on payment of all thedues by clients.

 

PART C : Terms and Conditions of HDFC Securities Limited for Trading in E-margin

 

DEFINITIONS:

In these terms and conditions, unless indicated otherwise, specific words and phrases have the meaning as stated hereunder (arranged alphabetically for ease of reading) and the client confirms having read and understood these words and phrases.

 

"Account" shall mean the online account of the Client with HDFC securities, HDFC Bank Limited (as Depository Participant) and HDFC Bank Limited (as Bank).

 "Client" shall mean a person who is a registered customer of HDFC securities Ltd.

 "Margin" shall mean the total amount/collateral that should be made available by the Client to HDFC securities for taking a e-Margin Position under the Facility.

 "Security-specific Margins" shall mean the minimum margin to be made available by the Client for placing e-Margin Order under the Facility

 "Traded Price" shall mean the price at which a transaction is carried out in a particular Security on the Exchange.

 

PRODUCT FEATURES

Margin Trading Facility hereinafter referred to as "E-margin”, is a facility offered by HDFC Securities Limited which allows the Client to take positions by providing prescribed margin and the balance amount is funded by HDFC Securities Limited to meet the pay-in obligation of the Client, Client can later take delivery either by making the necessary funds settlement or square up such positions. The client agrees that any fresh position under E-margin shall be allowed to be created only when client has provided Initial Margin required for such position in such form as specified by HDFC Securities Limited. The balance obligation would be funded by HDFC Securities and will be paid to thestock exchange for meeting the client’s pay-in obligation. Client then needs to ensure that the available margin is always above the Minimum Margin specified by HDFC Securities Limited to avoid squaring off the positions.

Currently E-margin product is available for a duration of T+275 working days. Customer agreeing the said terms and condition will be eligible for a facility for T+275 working days (Please refer the FAQ for current duration. HDFC Securities reserve the right to change the said time duration at its discretion) from the day they accept the said terms and condition. Working days will not include settlement holiday(s).

E-margin orders will be allowed only if the order prices are within the daily price range decided by the Exchange and within the daily price range as decided by HDFC Securities, if any, from time to time. If the order price is not within the above price range, such Fresh order(s) would be rejected.

The client understands that the positions will be permitted to be continued upon fulfillment of the necessary Margin requirements as specified by HDFC Securities Limited for the particular scrip from time to time. The Client agrees that though presently there is no maximum time limit prescribed by HDFC Securities for keeping the positions open, HDFC Securities reserves the right at its discretion to stipulate a maximum time within which Client will have to take the delivery thereof.

The client agrees that, securities purchased by the client shall be retained by HDFC Securities Limited in it’sdemat account until the client fulfills the contractual obligation for the respective BUY transaction in which the securities are bought. On settlement of the contractual obligations, the securities will be delivered to the linked Demat account of the client. If the client fails to make the necessary Funds Pay in by the stipulated time (if any), theSecurities will be sold by HDFC Securities Limited, at its discretion, in the subsequent settlement(s) for thepurpose of settling the outstanding amount.

The client agrees that HDFC Securities Limited may at its discretion, in accordance with its risk managementpolicy, disable certain securities and square off all open positions in such scrip which are not converted to delivery irrespective of margin availability on account of corporate action such as stock split, issue of bonus shares, merger, spin off, Buy Back and the like. HDFC Securities will duly intimate the Client accordingly and Client agrees that HDFC Securities Limited cannot be held liable for any losses arising out of such disablement or squaring off of security.

The Client confirms that he is aware of the charges and other statutory levies as are prevailing and as they apply to the facility. The schedule of charges would be provided to the Client, by displaying such schedule on the Website. The schedule of charges would be subject to change by HDFC Securities and statutory levies may change from time to time and client agrees and accepts to comply by these charges.

The client agrees that he/she shall be liable to pay such Interest rate as may be decided from time to time by HDFC Securities Ltd., on all outstanding payment beyond the due date (i.e. pay-in-date) by the client to HDFC Securities Ltd.

The Client understands that under E-margin, Client would not be able to take further positions and/or existing positions may be squared off by HDFC Securities at its discretion on occurrence of any of the following events:

  1. If at any point of time total exposure across all stocks of all the Clients of HDFC Securities taken together under this facility exceeds the SEBI / Stock Exchange prescribed maximum allowable exposure limit specified for a stock broker. Client agrees that HDFC Securities may set this limit at its discretion which can be lower than the limits prescribed by SEBI as part of its risk management process.
  2. If the Client exceeds or is about to exceed the maximum allowable exposure for a single Client. Client understands that SEBI has prescribed a maximum limit for allowing exposure to a single Client. Client agrees that HDFC Securities may set this single Client exposure limit at its discretion which can be lower than the limits prescribed by SEBI as part of its risk management process.
  3. If the total exposure in a particular stock of all the Clients of HDFC Securities taken together under this facility reaches the maximum allowable limit for that stock as defined by HDFC Securities.
  4. If the exposure in a particular stock by a single Client under this facility reaches the maximum allowable limit for that stock for a single Client as defined by HDFC Securities.
  5. If the stock moves out from the list of eligible stocks under E-margin and becomes ineligible for offering under E-margin.
  6. Any other circumstances due to change in regulatory requirements from time to time or risk management process due to changing market conditions.
 

The terms mentioned herein are applicable only for Margin Trading Funding (E-margin) product offered by HDFC Securities under SEBI circular no. CIR/MRD/DP/54/2017 dated June 13, 2017. The client understands that HDFC Securities shall be reporting to stock exchanges on a daily basis the details of client’s funded positions/collateral stocks and such other details as may be required by stock exchanges from time to time. The client understands that client is required to disclose whether he is a promoter or forming of the promoter group of the stock in which he has taken an E-margin position or given as collateral which is required for daily reporting to stock exchanges. In absence of any such disclosure, HDFC Securities shall consider the client as a non-promoter and will report to stock exchanges accordingly.

 

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