Margins are the “deposits” that are to be considered for reporting shortfall. While limits are what are available for you to trade the next day. Remember that Partners can always visit PLClients>Risk>Reports>Combined limit to understand what computation has gone into creating limits on ODIN for the next day.
There are 3 main reasons why this difference happens:
- The exchanges give leeway in reporting stock collateral value for margins on VAR basis (Example, a stock may have a VAR Margin of 25% but after combining Exchange ELM and Exchange Ad Hoc Margins – which PL takes for giving limits – the haircut may be 100%) but at times, the final haircut (VAR+ELM+AD HOC) may be much higher than this and therefore, from a risk perspective, we may not give any limits even though the DMR shows margin available.
- The second major source is the ledger itself – For margin purposes, the exchange allows the broker to consider what is known as the settled ledger (Ledger balance as of today end excluding future debits/credits) while for limit purposes, we consider what is the final ledger balance (after considering all future sales and purchases)
- The other difference is in the treatment of all components of what makes a “deposit”- the regulations and the practical issues faced by a broker mean that the treatment may be very different for some components as the following table clarifies:
| Component | Limit Treatment | Daily Margin Report |
| CUSA STOCK | Considered with Exchange Haircut (VAR+ELM+Ad Hoc) | Considered with Exchange VAR Margin only |
| PLEDGE STOCK | Considered with Exchange Haircut (VAR+ELM+Ad Hoc) | Considered with Exchange VAR Margin Only |
| DP POA UNPLEDGED STOCK | Not Considered | Not Considered |
| SALE ON T DAY | 80% value is given as limit from DP Free holding 20%+Exchange Margin% is deducted from CFS for Pledged stock | Early Payin (EPI) value will be considered up to 80% |
| SALE ON T-1 DAY | 100% value is available as margin | EPI value up to 100% will be considered |
| PURCHASE ON T DAY | Amount deducted from Margin | Not considered |
| PURCHASE ON T-1 DAY | Amount Deducted from Margin | Not considered |
| HAIRCUT USED FOR VALUATION | Exchange Total Margin (VAR+ELM+Ad Hoc) | Exchange VAR margin only |
| DATE USED FOR VALUATION | T-1 day Closing Price | T-1 day Closing Price |
| PROFITS ON T DAY – CASH SEGMENT | Not considered for margin | Not considered for margin |
| PROFITS ON T – DAY FNO SEGMENT | Not considered for margin | Not considered for margin |
For any clarifications on above, do write in to us at customerconnect@plindia.com